South Korean chipmaker MagnaChip Semiconductor announced that it signed an agreement to sell its foundry business division and Fab 4 manufacturing facility for 530 billion won ($435 million).
The company sold its foundry business unit and plant located in Cheongju to a special purpose company (SPC) led by private equity firms Credian Partners and Alchemist Capital Partners Korea. The sales streamline MagnaChip into a standard product vendor focused on analog, power, and display drivers for OLED and microLED.
MagnaChip Semiconductor is the top organic light-emitting diode (OLED) display drive chips supplier in the world. The company, established in 2004, spun-off from Hynix Semiconductor Inc, currently SK Hynix.
MagnaChip said it would inject the earnings of the sale to lessen its total debt. The company plans to focus its capabilities on developing displays and power semiconductors. It would turn itself into a lite if not quite fabless chip company
Sales Breakdown
The SPC agreed to acquire MagnaChip’s businesses for 420 billion won ($345 million) in cash, and 110 billion won ($90 million) in statutory severance liabilities. The liabilities encompass employees that would transfer with the businesses, the consortium said.
The terms of the acquisition encompass liabilities, such as the transfer of about 1,500 executives and employees with the businesses. The companies expect the acquisition deal to take about four to six months to complete.
SK Hynix Inc. and the Korean Federation of Community Credit Cooperatives (KFCCC) are the limited partners of the SPC, in which Alchemist and Credian serve as joint general partners.
The KFCCC would have 50 percent plus one share stake in the SPC, while SK Hynix Inc. owns 49.8 percent. SK Hynix said it would help provide its expertise to continue the operation of the fab facility.
Kim Young-joon said that the decision to sell the businesses would create an excellent outcome for all stakeholders. The CEO of MagnaChip Semiconductor added that the deal would allow the company to improve its balance sheet meaningfully. They would also entirely focus as a pure-play standard products company.
An SK Hynix official said the acquisition would offer opportunities for the company to tap growing demand for 8-inch foundry.
