Abu Dhabi to Buy Chartered Semi for S$2.5 Billion

Abu Dhabi agreed to buy Singapore’s state-controlled Chartered Semiconductor Manufacturing Ltd. for S$2.5 billion ($1.8 billion) to create a challenger to the world’s second-biggest maker of customized chips.

Advanced Technology Investment Co., an investment company owned by Abu Dhabi, will pay S$2.68 ($1.86) a share in cash for Chartered Semiconductor, ATIC said in a Business Wire statement today. That compares with the closing price of S$2.66 on Sept. 4, and is 14 percent more than the company’s 30 trading-day volume weighted average price. Singapore’s Temasek Holdings Pte, owner of about 62 percent of Chartered Semiconductor, backs the deal.

Abu Dhabi plans to combine the maker of chips used in Microsoft Corp.’s Xbox 360 game console with Globalfoundries Inc., a venture ATIC created with Advanced Micro Devices Inc. last year. Temasek is ending a 22-year investment in the unprofitable company, which has eliminated workers and cut overtime to reduce costs.

“This deal makes a lot of sense,” said Steven Pelayo, an analyst at HSBC Holdings Plc in Hong Kong who has rated Chartered Semiconductor’s stock “neutral” since March. “This presents a formidable threat to other players and really does start to change the competitive landscape much more quickly than I thought.”

Chartered Semiconductor, which was halted in Singapore trading today, has more than doubled this year.