Jazz acquisition to create economies of scale

Combined company will bring together Tower's strength in CMOS image sensor, nonvolatile memory and RF CMOS with Jazz's expertise in mixed signal, power management and RF.

Tower Semiconductor is set to acquire Jazz Semiconductor in a stock-for-stock transaction valued at approximately US $40 million.

"The acquisition of Jazz is an excellent strategic fit for Tower - it creates economies of scale which allows for improved margins and strongly complements our specialty process offering, transforming us into the leading specialty pure-play foundry", says Russell Ellwanger, CEO of Tower.

"We are confident that we will realise significant benefits and synergies, including a comprehensive process portfolio which expands our addressable market and fuels a growing and more diversified customer base with highly differentiated product platforms".

"Over the past few months, our board has carried out a review of various strategic alternatives to enhance stockholder value and this definitive agreement is the result of that process", says Gil Amelio, Chairman and CEO of Jazz.

"Jazz's management looks forward to working with Tower in the coming months to successfully implement the transaction".

"We are excited about the potential of joining together with Tower and believe Jazz's shareholders, customers, employees and other stakeholders will benefit from the enhanced growth, profitability and cash flow prospects of the combined company", adds Paul Pittman, Chief Financial and Administrative Officer of Jazz.

The combined company will be an industry leader, bringing together Tower's strength in CMOS image sensor, nonvolatile memory (NVM) and RF CMOS with Jazz's expertise in mixed signal, power management (CMOS and BCD) and RF (RF CMOS, SiGe and BiCMOS) to create one of the broadest portfolios of specialty process technologies.

With operational facilities now spanning the globe (USA, Israel and China), the combined company will offer capacity of approximately 750,000 wafer starts annually (8in equivalents).

The agreement has been unanimously approved by the boards of directors of both Tower and Jazz and the transaction is subject to the approval of Jazz's shareholders and other customary closing conditions.

The transaction is expected to close in the second half of 2008.

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