GlobalFoundries Announces Launch of $950 Million Secondary Offering of Ordinary Shares, Including Concurrent $200 Million Share Repurchase
GlobalFoundries (Nasdaq: GFS) announced a $950 million secondary public offering of its ordinary shares, including a concurrent $200 million share repurchase. All shares are offered by Mubadala Technology Investment Company, GlobalFoundries' largest shareholder. An additional $112.5 million worth of shares may be purchased by underwriters within 30 days. GlobalFoundries will not receive proceeds from the sale but will fund the share repurchase using its own cash reserves. Morgan Stanley & Co. and BofA Securities are managing the offering, with relevant documents filed with the SEC.
- GlobalFoundries is engaging in a $200 million share repurchase, potentially signaling confidence in the company's future.
- The company is using its own cash reserves to fund the share repurchase, indicating strong liquidity.
- The offering is managed by reputable financial institutions, Morgan Stanley & Co. and BofA Securities, which may boost investor confidence.
- GlobalFoundries will not receive any proceeds from the $950 million offering, as all shares are sold by a major shareholder.
- The large share offering could dilute the value of existing shares.
- The additional $112.5 million option for underwriters could further increase share dilution.
Insights
GlobalFoundries' announcement of a $950 million secondary offering of shares, with a concurrent $200 million share repurchase, signifies a strategic move by the company's largest shareholder, Mubadala Technology Investment Company. This secondary offering allows the selling shareholder to liquidate a portion of its holdings while GlobalFoundries itself is not issuing new shares or receiving proceeds from the sale. The repurchase of shares using cash on hand suggests that GlobalFoundries believes its current valuation is favorable and it is an indication of confidence in the company's future prospects.
For investors, this could mean several things. First, the share repurchase should help in maintaining or even boosting the stock price by reducing the number of shares outstanding, which can improve earnings per share (EPS). Second, as a secondary offering, there won't be any dilution of existing shareholders' equity, which is typically a positive sign. However, it's also essential to consider why the largest shareholder is reducing its stake—although there's no immediate red flag, large stakeholders selling shares can sometimes be perceived as a lack of confidence.
In the short-term, the market reaction will focus on the share price stabilization due to the repurchase. For the long-term, investors should monitor GlobalFoundries' strategic moves and financial health, especially how effectively it can utilize its liquidity post-repurchase for growth and innovation.
The concurrent share repurchase aligned with the secondary offering is a critical point to highlight. This move is relatively standard for signaling a company's robust financial position. Essentially, share repurchases might be seen as a signal that the management believes their stock is undervalued, which can prompt market participants to reassess their valuation models. By repurchasing $200 million worth of shares, GlobalFoundries not only supports its stock price but also sends a positive message about its financial health and liquidity management.
For retail investors, understanding the market context is vital. In the semiconductor industry, where capital expenses are significant, having the financial flexibility to execute share repurchases without compromising operational funding is noteworthy. GlobalFoundries' decision to utilize existing cash reserves, rather than assuming debt, for the repurchase demonstrates prudent financial planning. Investors should consider the broader market trends, such as semiconductor demand and supply chain dynamics, to gauge the long-term impact of such financial maneuvers.
From a shareholder perspective, this action might elevate investor confidence and potentially attract new investments due to an improved earnings per share metric, providing a clearer path for future capital appreciation.
MALTA, N.Y., May 22, 2024 (GLOBE NEWSWIRE) -- GlobalFoundries Inc. (“GlobalFoundries” or “GF”) (Nasdaq: GFS) today announced the launch of a secondary public offering of
GlobalFoundries is not selling any ordinary shares in the offering and will not receive any proceeds from the sale of the shares being offered by the Selling Shareholder.
GlobalFoundries intends to concurrently repurchase from the underwriters approximately
Morgan Stanley & Co. LLC and BofA Securities are acting as book-running managers for the offering.
The offering of these securities is being made only by means of a prospectus. A registration statement relating to these securities has been filed with the Securities and Exchange Commission (the “SEC”) and has become effective. A preliminary prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC. A copy of the preliminary prospectus relating to the offering, when available, may be obtained from: Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, or by email at prospectus@morganstanley.com; BofA Securities, Attention: Prospectus Department, NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, or by email at dg.prospectus_requests@bofa.com; or by accessing the SEC’s website at www.sec.gov.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About GlobalFoundries
GlobalFoundries® (GF®) is one of the world’s leading semiconductor manufacturers. GF is redefining innovation and semiconductor manufacturing by developing and delivering feature-rich process technology solutions that provide leadership performance in pervasive high growth markets. GF offers a unique mix of design, development and fabrication services. With a talented and diverse workforce and an at-scale manufacturing footprint spanning the U.S., Europe and Asia, GF is a trusted technology source to its worldwide customers.
GlobalFoundries Inc., GF, GlobalFoundries, the GF logos and other GF marks are trademarks of GlobalFoundries Inc. or its subsidiaries. All other trademarks are the property of their respective owners.
Forward-Looking Statements
This press release includes “forward-looking statements” that reflect our current expectations and views of future events. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and include but are not limited to, statements regarding the terms, timing and expected completion of the offering and the Share Repurchase. These statements are based on current expectations, assumptions, estimates, forecasts, projections and limited information available at the time they are made. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” "outlook," "on track," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a broad variety of risks and uncertainties, both known and unknown, including regarding market conditions, our business and the Selling Shareholder. Any inaccuracy in our assumptions and estimates could affect the realization of the expectations or forecasts in these forward-looking statements. Recipients are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements are made and should not be construed as statements of fact. Except to the extent required by federal securities laws, we undertake no obligation to update any information or any forward-looking statements as a result of new information, subsequent events, or any other circumstances after the date hereof, or to reflect the occurrence of unanticipated events. For a discussion of potential risks and uncertainties, please refer to the risk factors and cautionary statements in our 2023 Annual Report on Form 20-F, current reports on Form 6-K and other reports filed with the Securities and Exchange Commission. Copies of our SEC filings are available on our Investor Relations website, investors.gf.com, or from the SEC website, www.sec.gov.
| Investor Contact: | Media Contact: |
| ir@gf.com | erica.mcgill@globalfoundries.com |
FAQ
What is the value of the secondary public offering announced by GlobalFoundries?
Is GlobalFoundries selling any shares in the recently announced offering?
How much is GlobalFoundries planning to repurchase in shares?
Will GlobalFoundries receive any proceeds from the $950 million offering?
What is the role of Morgan Stanley & Co. and BofA Securities in the offering?
What will fund the $200 million share repurchase by GlobalFoundries?
Is the share repurchase by GlobalFoundries conditional on the closing of the public offering?
Can underwriters purchase additional shares in this offering?
