Tower Jumps 53% After Buying Panasonic’s Chip Foundries
The stock of the Migdal Haemek, Israel-based company surged 45 percent to $6.50 at the close of trading in New York, the biggest jump since its 1994 U.S. debut. The stock traded at a $2 premium to the equity in Tel Aviv. Tower shares jumped 8.7 percent on Dec. 18, the most since April, after it announced the credit line with Wells Fargo & Co.
Tower’s Japanese unit TowerJazz will hold 51 percent of the joint venture and Panasonic will keep the remaining 49 percent, the Osaka-based company said in a statement to the Tokyo Stock Exchange today. Chardan Capital Markets LLC raised its 2014 revenue forecast for Tower by 30 percent to $753 million, citing terms favorable to TowerJazz and the prospect of a recovery in chip demand next year.
“With this acquisition, coupled with the recent signing of a $70 million credit line with Wells Fargo, we believe Tower has positioned itself to take advantage of a broad based bounce back in semiconductors in fiscal year 2014,” Jay Srivatsa, a New York-based analyst at Chardan who has a buy rating on Tower, wrote in a report today.
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