Harris Corp is giving up on its struggling semiconductor business, and has agreed to sell it off to a subsidiary of Sterling Holding Co LLC, an investment portfolio company owed by CitiCorp Venture Capital Ltd, and other investors. Previously, Harris had indicated that it would sell off just the power portion of the business, but now says that selling the whole thing, and enabling it to operate as one company will give it the size and the flexibility it needs to address the market. Harris will retain a 10% stake. The other investors include certain individuals and affiliates of Credit Suisse First Boston Corp.
Under the terms of the deal, Harris will receive around $700m in cash, notes, retained receivables and contingency payments, along with the equity. The deal doesn’t include Harris’ suppression business or photomask operations, which will be sold separately. The money will be used by Harris to reduce its debt and for general corporate purposes.
Semiconductor sales made $530m during the last year, mostly in discrete semiconductors and integrated circuits for the power, space, defense and communications market. The division employs 6,200 people, and includes the only eight-inch wafer power fabrication facility, in Mountaintop, Pennsylvania. There are other fabrication and assembly operations in Florida and Ohio, and a test and assembly plant in Kuala Lumpar, Malaysia. It also holds intellectual property from Harris and its predecessors such as GE Solid State and RCA.
The company will be run as an independent company led by Gregory Williams, current president of Harris Semiconductor. Harris itself, left with five divisions and 11,000 employees, will concentrate on providing communications infrastructure for voice, data and video.
