STMicroelectronics, Intel and private venture firm Francisco Partners announced today they will create a new independent company to make flash memory chips for a variety of consumer and industrial devices, including cellular phones, MP3 players, digital cameras and computers. The new company, to be managed by Brian Harrison, vice president and general manager of Intel’s Flash Memory Group, as CEO-designate and Mario Licciardello, currently corporate vice president of ST’s Flash Memories Group, as COO-designate, will be based in Switzerland and incorporated in the Netherlands, with nine main research and manufacturing locations around the world and approximately 8000 employees. It will also benefit from a worldwide sales force, the companies said in a statement, and will combine key research and development, manufacturing and sales and marketing assets of Intel and STMicroelectronics into a "streamlined worldwide structure with the scale to produce cost-effective and innovative nonvolatile memory solutions." Under the agreement, STMicroelectronics will sell its flash memory assets, including its NAND joint venture interest and other NOR resources, to the new company while Intel will sell its NOR assets and resources. In exchange, Intel will receive a 45.1-percent equity ownership stake and a $432 million cash payment at the close of the transaction, expected to occur in the second half of this year, subject to regulatory approvals and customary closing conditions. STMicroelectronics will receive a 48.6-percent equity ownership stake and a $468 million cash payment at close. Francisco Partners L.P., a Menlo Park, Calif.-based private equity firm, will invest $150 million in cash for convertible preferred stock representing a 6.3 percent ownership interest. At the same time, the companies have arranged for the new company to receive commitments for a $1.3 billion term loan and $250 million revolver. “The new company will immediately be able to offer a very broad range of nonvolatile memory solutions in order to address the needs of a wide variety of communications and industrial customers,” said Dipanjan Deb, founder and managing partner at Francisco Partners. "With assets and resources from Intel and STMicroelectronics, including a patent portfolio of approximately 2500 patents and 1000 patents pending, the new company will have the scale to benefit from the increasing demand for memory resulting from the growing amount of information and content that is becoming more mobile and is now based almost entirely on digital technology," according to the statement. "The integration of STMicroelectronics’ and Intel’s parallel programs on phase-change memory, a key technology capability, will also help to bring the benefits of advanced flash memory technology to potential customers more quickly and efficiently." Carlo Bozotti, STMicroelectronics president and CEO, and designated the nonexecutive chairman of the new company, said, “The new company will be positioned to service customers with all of the elements necessary to deliver current and next-generation nonvolatile memory technologies, while allowing ST to redefine its participation in flash memory." Harrison said, “From the outset, the company will be a leading supplier of flash memory solutions for wireless communications. We will be able to offer customers complete solutions with NOR- and NAND-based technologies, which we believe will provide significant opportunities for growth and the potential to develop products for many new application areas and geographic regions.” For more information, visit: www.intel.com