Tower Jumps 53% After Buying Panasonic’s Chip FoundriesGabrielle Coppola
Tower Semiconductor Ltd. gained the most on record in New York after the Israeli chip maker said it will buy three semiconductor plants from Panasonic Corp.
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.