Intel Corp signed a deal to buy Israeli chipmaker Tower Semiconductor (TSEM.TA) for $5.4 billion, the companies said on Tuesday, as Intel looks to further expand its manufacturing capacity and technology portfolio amid rising demand.
Intel is paying $53 per Tower share, well above a closing price of $33.13 on Nasdaq on Monday.
The transaction is expected to close in about 12 months and has already been unanimously approved by both boards. The deal is still subject to certain regulatory approvals including the approval from Tower’s shareholders.
It is expected to be immediately accretive to Intel’s non-GAAP earnings per share. Intel said it intends to fund the acquisition with cash from its balance sheet.
Tower, the companies said, will remain independent until the deal closes. Then, Tower will be integrated into Intel Foundry Services (IFS), which Intel established a year ago to help meet growing global demand for semiconductor manufacturing capacity.
Shares in Tower’s Tel Aviv shares were halted pending the announcement and have not yet begun trading.
They rose 48% in after hours trading on Nasdaq on Monday after news of a possible acquisition was reported