Newport Beach-based contract chipmaker Jazz Technologies Inc. is set to continue operating under its own name with just a few initial changes under a deal to be bought by Israel’s Tower Semiconductor Ltd.
Late Monday, Tower said it is paying $40 million plus an additional $129 million in debt for Jazz.
Tower Chief Executive Russell Ellwanger is set to take over running Jazz as a subsidiary. He plans to travel between Newport Beach and Tower’s headquarters near Haifa, Israel, according to Jazz spokesman Todd Mahlen.
The acquisition, set to close in the second half of the year, isn’t expected to bring layoffs beyond what Jazz could see as part of an ongoing restructuring, according to Jazz Chief Financial Officer Paul Pittman.
“We have been very aggressive in our cost cutting and we’ll continue to do so, but that is not related to the merger,” he said.
Jazz employs about 700 local employees.
What roles Jazz’s top executives will play, if any, hasn’t been determined yet, according to the company.
A handful of operations managers are set to stay on to run the company’s chip plant, according to Pittman.
The heads of Jazz’s plant, research and development and sales are likely to keep their posts, he said.
It’s unclear what role, if any, Jazz Chief Executive Gil Amelio will have. He spearheaded a 2007 buy of the company.
Both Tower and Jazz make silicon wafers, the building blocks of chips, for other companies.
Shares of Jazz soared Tuesday in the market’s regular trading reaction to the deal.
The stock was up nearly 70% in midday New York trading on a recent market value of $27 million.
Shares of Tower slumped nearly 8% on a recent market value of $133 million.
The stock likely dropped on investor fears it’s paying too much for Jazz, which had a market value of about $13 million before the offer.
Tower, which did some $231 million in revenue last year, has two chip plants in Israel. It specializes in making flash memory and image sensing chips that go into gas gauges, X-ray machines and other devices.
Jazz got its start as the chip making arm of Rockwell International Inc.’s semiconductor unit, which made chips for modems.
Rockwell spun off the business as Newport Beach-based Conexant Systems Inc. in 1999.
In 2002, Conexant split off its Newport Beach chip factory as Jazz Semiconductor.
Last year, Apple Inc. alums Amelio, Steve Wozniak and Ellen Hancock bought Jazz for $260 million after raising money from investors in 2006.
