MagnaChip Semiconductor is selling its foundry services group and factory in Cheongju to a South Korean special purpose acquisition company (SPAC) formed by Alchemist Capital Partners Korea and Credian Partners for USD 435.00 million.
The value consists of the South Korean won equivalent of USD 344.70 million in cash, based on the exchange rate on the third business day prior to the closing date of the transaction.
It also includes the SPAC’s assumption of statutory severance liabilities attributable to the employees who will be transferred alongside the business, which is currently estimated to be approximately USD 90.00 million.
MagnaChip said it expects to use net operating loss carryforwards to offset a portion of the tax obligations related to this transaction.
Furthermore, the company has earmarked funds to significantly reduce debt and strengthen its balance sheet.
Under the terms of the agreement, Alchemist and Credian are serving as joint general partners of a project fund that established the SPAC.
Its limited partners consist of SK hynix, one of the largest semiconductor companies in the world, and Korean Federation of Community Credit Cooperatives.
MagnaChip is using the sale to streamline into a pure-play standard products business positioned to focus on high growth markets in analogue power and panel offerings.
The group claims to be the largest independent supplier of organic light emitting diodes (OLED) display driver integrated circuits (DDICs) to the world’s top two panel manufacturers for smartphones.
Its portfolio includes multiple 28-nanometer panel drivers with the industry’s lowest power and comprising upcoming 5G and foldable models.
MagnaChip will continue to operate its discrete 8″ fab (fab 3, located in Gumi, South Korea) used primarily to manufacture wafers for power standard products and non-OLED display products.
Zephyr, the M&A database published by Bureau van Dijk, shows 587 deals targeting companies based in South Korea have been announced in 2020 to date.
MagnaChip’s sale will be the third largest of the year so far.
© Zephus Ltd