Melbourne, FL-based Harris Corp. announced late yesterday that it is selling all of its semiconductor business. By doing this, the company hopes to improve its position in the communications equipment market.
"Selling the whole semiconductor business and allowing it to operate as one company giving it both the size and flexibility it needs to address the semiconductor market," says Philip Farmer, chair and CEO of Harris. "This will provide the best growth path for the business and its employees."
Harris will sell its semiconductor business to a subsidiary of Sterling Holding Company LLC, a Citicorp Venture Capital investment portfolio company. Other investors will include certain individuals and affiliates of Credit Suisse First Boston Corp.
Under terms of the agreement, Harris will receive approximately $700 million in cash, notes, retained receivables, and contingency payments. In addition, the company will retain a 10% stake in the semiconductor company.
Harris Semiconductor, which recorded $530 million in sales over the past 12 months, manufactures discrete semiconductors and ICs for the power, space, defense, and communications markets. In the wireless space, the company is best known for wireless local-area network chip sets and converter products.
Harris Semiconductor employs more than 6,200 people. The division has an eight-inch wafer fab plan in Pennsylvania, fabrication and assembly plants in Florida and Ohio, and a test-and-assembly facility in Malaysia.
The semiconductor business will be operated as an independent company. Gregory Weaver, current president of Harris Semiconductor, will lead the new company.
Reaction of this transaction with Harris Semiconductor is high. According to a spokesperson within the sector, the spin-off will allow Harris Semiconductor to establish itself as a leading semiconductor manufacturer in key markets, such as the wireless industry.
Currently, a new name has not been chosen for Harris Semiconductor. The company expects to establish a name over the next few months.
Joining the Ranks
Through yesterday's announcement, Harris joins several other major manufacturers that have spun off their semiconductor business over the past year. These other manufacturers include Rockwell, which spun off its semiconductor unit in late-June of last year, and Siemens, which broke off its semiconductor operations in November of 1998.
Once the sale is complete, Harris says it will be a more integrated organization operating through five divisions focusing on areas such as wireless, broadcast, government, systems, and network support. The company will have approximately 11,000 employed and will have facilities in 90 countries.