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Merger Arbitrage Mondays – Three Potential Deals Come To Fruition

  • February 21, 2022

Merger activity increased last week with five new deals announced and five deals completed. Three of the five new deals announced were successful “deals in the works”.

Tower Semiconductor (TSEM)

Founded in 1993 and headquartered in Migdal Haemek, Israel, Tower Semiconductor is an independent foundry of analog semiconductor solutions that provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. We added TSEM as a potential deal to our list of deals in the works on February 14, 2022, when The Wall Street Journal reported that Intel (INTC) was close to a deal to buy the Israeli chip company for nearly $6 billion. The deal materialized the next day with Intel announcing that it was acquiring Tower for $53 a share, representing a premium of almost 60% to Tower’s closing price the previous day.

Intel established Intel Foundry Services (IFS) in March 2021 to help meet the growing global demand for semiconductor manufacturing capacity. Intel’s intent is for IFS and Tower to become a fully integrated foundry business.

The deal is trading at a spread of almost 13%, indicating potential risks of an international deal and risks related to consolidation within the semiconductor industry.

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