To: Elroy who wrote (8813 ) 5/5/2000 1:08:00 PM From: Scrapps Respond to of 9236
STMicro to buy Nortel's chip operation for $100 million Semiconductor Business News (05/05/00, 09:19:56 AM EDT) GENEVA -- STMicroelectronics NV here today announced an agreement to acquire the semiconductor production unit of Nortel Networks Corp. in Ottawa, Canada, for $100 million. The agreement includes a six-year strategic tie between STMicroelectronics and Nortel Networks. The acquisition is slated to be completed by the late second quarter or early third quarter of this year, according to the two companies. As part of the transaction, the two companies have entered into a six-year supply agreement, under which STMicroelectronics will provide Nortel Networks with semiconductors, valued at about $2 billion during the first three years of the arrangement. The companies also agreed to enter into a development pact for technology and product maintenance, whereby Nortel Networks and STMicroelectronics will collaborate on new ICs and products for communications systems markets. "This new agreement will cover a variety of application fields, and the field of high speed optical networks," said Aldo Romano, corporate vice president and general manager of STMicroelectronics' Telecom, Peripherals and Automotive Group. Under the terms of the agreement, approximately 470 Nortel Networks employees will receive offers of employment from STMicroelectronics. No job losses are anticipated as a result of the sale, according to the two companies. STMicroelectronics said it will work with Nortel to deliver a proprietary set of technologies for system-on-chip designs. These new devices will be used Nortel's wide range of system products for voice, data, and video transmissions. "This provides us with greater ability to focus on our core business of developing quality systems and services for the high-performance Internet," said Barbara Callaghan, vice president and general manager of Nortel Networks. The Canadian communications giant has been working with STMicroelectronics under a strategic supply agreement since 1993. According to Nortel, the new agreement is an evolution of the ongoing relationships between the two companiessemibiznews.com