Shareholders of Singapore’s state- controlled Chartered Semiconductor Manufacturing approved an offer by Abu Dhabi to buy the world’s third-biggest maker of customized chips for $2.5 billion, Jim Norling, chairman of the Singaporean company, said today.

 

Advanced Technology Investment Co., an investment company owned by Abu Dhabi, will pay $2.68 a share in cash for Chartered Semiconductor, ATIC said on Sept. 7. That compares with the closing price of $2.66 on Sept. 4, and is 14% more than the company’s 30 trading-day volume weighted average price.

 

Abu Dhabi plans to combine the maker of chips used in Microsoft Corp.’s Xbox 360 game console with Globalfoundries Inc., a venture ATIC created with Advanced Micro Devices Inc. last year, to create a challenger to United Microelectronics Corp., the world’s second-biggest maker of customized chips.

 

The purchase of Chartered Semiconductor will add 11.3% of the worldwide custom-chip market to Globalfoundries, according to iSuppli data, which doesn’t rank Globalfoundries. Hsinchu, Taiwan-based United Microelectronics Corp., with 14.1% market share in the first quarter, trails Taiwan Semiconductor Manufacturing Co. which commanded 49% of the market, according to a June 8 iSuppli report.

 

“By acquiring Chartered, ATIC is expanding its investments in the semiconductor industry which currently consist of a Globalfoundries leading facility in Dresden, Germany and a new, state-of-the-art facility under construction in upstate New York,” ATIC Chairman Waleed Al Mokarrab said in the statement on Sept. 7.

 

Singapore’s Temasek Holdings, owner of about 62% of Chartered Semiconductor, is ending a 22-year investment in the unprofitable company, which has eliminated workers and cut overtime to reduce costs.

 

Chartered Semiconductor was created in 1987 as a venture that included Singapore Technologies Engineering, another Temasek holding, and first sold shares to the public in 1999. Chartered Semiconductor is the world’s third-biggest maker of customized chips. Temasek is Singapore’s state investment firm.

 

Globalfoundries Chief Executive Officer Doug Grose will run the combined operations, ATIC has said. Chartered Semiconductor CEO Chia Song Hwee will be chief operating officer and will be in charge of integrating the operations.

 

The deal is valued at about $5.6 billion, including debt and convertible redeemable preference shares as of June 30, ATIC said. Chartered Semiconductor’s American depositary shares will be bought for about US$18.64 each ($26.1), depending on the exchange rate and other costs. Shares closed at US$18.78 in the U.S. on Sept. 4.

 

{jcomments on}