Harris today announced it is selling all of its semiconductor business, after saying previously that it only intended to sell of a portion of this division.
"Selling the whole semiconductor business and allowing it to operate as one company gives it both the size and flexibility it needs to address this dynamic industry," said Phillip W. Farmer, chief executive of Harris, in a statement.
Harris was one of the first chipmakers to manufacture a clone of Intel's 286 chip when it came out in the mid-1980s. Many PCs at that time came with Harris 286 processors which were virtually interchangeable with Intel chips. Harris eventually stopped making Intel clones.
Harris said it is repositioning itself to focus exclusively on the worldwide communications equipment market. The Melbourne, Florida, company has reached an agreement to sell the division to a subsidiary of Sterling Holding Company, a Citicorp Venture Capital investment portfolio company. Other investors will include certain individuals and affiliates of Credit Suisse First Boston Corporation. Harris will retain a 10 percent ownership position in the business, the company said.
Under the terms of the transaction, Harris will receive about $700 million in cash, notes, retained receivables, and contingency payments, in addition to the equity in the business, according to a company statement.
Harris plans to use the money to pay off debts and for "other general corporate purposes." The transaction, which is expected to be completed in the next two months, is "subject to financing, and regulatory and certain other approvals."
Sales for the semiconductor division were $530 million during the latest 12 months. The business manufactures chips primarily for the power, space, defense, and communications markets. It employs about 6,200 people. Operations are located in Pennsylvania, Florida, Ohio, and Kuala Lumpur, Malaysia. The business has an "intellectual property heritage" from Harris, GE Solid State, and RCA.
Gregory L. Williams, current president of Harris Semiconductor Sector, will head up the independent operation.
"Divesting the semiconductor business is part of Harris' overall repositioning effort to operate as one company, providing communications infrastructure for voice, data, and video. As part of the repositioning, Harris is in the process of eliminating the company's sector organization level and streamlining its remaining overhead structure," the company said in a statement.
Harris also is slated to spin off of its Lanier Worldwide office products business within the next few months.
Upon completion of these actions, Harris will have five divisions, with about 11,000 employees.
In the wireless market, Harris supplies digital microwave radios, wireless local loop telephony systems, and secure radios. In the broadcast market, Harris provides advanced digital and analog transmission systems, and mobile studio systems for television and radio stations. For the government communications market, Harris makes airborne, spaceborne, and ground-based communications and information systems.