UMC Announces Plans to Merge Four Semiconductor Foundry Units -- Alliance Holdings Valued at an Estimated $589 Million
SAN JOSE, Calif.--(BUSINESS WIRE)--June 16, 1999--United Microelectronics Corporation (UMC) announced plans on June 14, 1999 to merge four semiconductor wafer foundry units--United Semiconductor Corporation (USC), United Silicon Inc., (USIC), United Integrated Circuit Corporation (UICC) and UTEK Semiconductor Corporation into UMC, a publicly-traded company in Taiwan.
According to the proposed terms of the merger, as indicated in the press release, Alliance Semiconductor (Nasdaq:ALSC - news) will receive 247.7 million shares of UMC stock for its 247.7 million shares or 14.76% ownership of USC and approximately 35.6 million shares of UMC stock for its 48.1 million shares or 3.2% ownership of USIC. UMC has indicated that they expect to have approximately 8.8 billion shares outstanding as of the closing date of the merger.
Based on yesterday's closing price for UMC shares of NTD 67.50, and the current U.S. dollar exchange rate of 32.36, the estimated value of these investments is approximately $589 million. At March 31, 1999 the book value for these investments was approximately $98 million.
The merger is subject to shareholders and government approval and is expected to close before the end of the calendar year. According to UMC, the UMC shares received by Alliance are expected to be subject to a six-month ''lock-up'' or no trade period before the shares become freely tradable in Taiwan.
According to N.D. Reddy, Chairman/President and CEO of Alliance Semiconductor, ''This is a very positive transaction for Alliance. In addition to retaining our wafer capacity rights, we also gain access to the newer 0.25 and 0.18 process technologies.'' He added, ''The merger will also provide for economies of scale in technology development, customer engineering, operational management, facilities expansion as well as liquidity and return on investment.''
Robert Tsao, Chairman of UMC Group, stated that, ''This re-organization focuses our Taiwan-based fabrication units into a single more financially efficient and competitive organization, setting the stage for us to be the largest, most profitable, and most technologically advanced pure-play foundry in the world.'' Mr. Tsao added, ''With the merger and recently announced $1.3 billion fab expansion by UMC, the new combined entity will have wafer capacity of more than 2.4 million eight-inch equivalent wafers in year 2000.''
Alliance is also entitled to receive approximately $20 million payment within 60 days after completing the merger in connection with the previously reported sale of 35 million shares of USC stock in March 1998.
As previously announced on June 3, 1999, Alliance is entitled to receive 538,961 shares of Broadcom's Class B common stock in connection with the closing of the merger between Maverick Networks and Broadcom Corporation (Nasdaq:BRCM - news), a leading developer of integrated circuits enabling high-speed broadband communications. According to Broadcom, shares of Broadcom's Class B common stock are identical to Class A common stock except for certain voting rights, and are automatically converted into Class A common stock upon sale. Based on the closing share price on June 15, 1999, the market value of the Broadcom investment is approximately $60 million. The book value of this investment is zero.
Broadcom shares are subject to certain restrictions, including a restriction pursuant to the pooling-of-interest rules which prevents the Company from selling its shares until Broadocm first publicly reports thirty days of Broadcom and Maverick Networks combined operating results, which is expected to occur late July 1999.
Company Information
Alliance Semiconductor Corporation is a leading worldwide supplier of high performance memory and memory intensive logic products. Alliance's product lines include Static Random Access Memory (SRAM), Dynamic Random Access Memory (DRAM), Flash memory and embedded memory and logic products. Alliance designs, develops and markets its products to the desktop and portable computing, networking, telecommunication, instrumentation, and consumer markets. Alliance manufactures its products through independent and joint venture manufacturing facilities, using advanced CMOS process technologies with line widths as narrow as 0.25 microns. Alliance was founded in 1985 with headquarters in San Jose. Additional Company information can be found on our home page: alsc.com.
About UMC
UMC Group is a world leading semiconductor foundry group consisting of United Microelectronics Corporation (UMC), United Semiconductor Corporation (USC), United Integrated Circuits Corporation (UICC), United Silicon, Inc. (USIC), UTEK Semiconductor Corporation (UTEK), and the first dedicated foundry in Japan, Nippon Foundry Inc. (NFI).
The Group leads the dedicated foundry industry in value-added design support with its Gold IP (tm) program. In 1998, UMC Group's L250 (0.25 um) and L220 (0.22 um) process technologies set the foundry industry benchmark for production volumes, capacity and yields in very deep sub-micron technology.
Also in 1998, two UMC Group customers introduced 0.18 um prototype products. In early 1999, 0.18 process technology was production qualified with 1000-hour product reliability tests. In 1999, UMC Group will have production-ready 0.18 um (L180) copper-interconnect technology.
UMC Group (USA) offices are located at 788 Palomar Avenue, Sunnyvale, CA 94086, tel. 408/733-8881. The company's website address is www.umcgroup.com.
Except for historical information, the above statements of this press release (including, without limitation, expressions of expectation, belief, anticipation or estimation of the Company or its management) are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. These risks and uncertainties include such factors, among others, as the UMC merger not closing, changes in the terms of the merger, price erosion in UMC's stock, and the risk factors listed under Item 1: Business and Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the fiscal year ended March 28, 1998 and Form 10Q for quarter ended January 2, 1999, which have been filed with the Securities and Exchange Commission and which are available through the Company's home page, alsc.com. These forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statement is based, in whole or part.
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Contact:
Alliance Semiconductor
Dave Eichler, 408/383-4900
deichler@alsc.com
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