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Globalfoundries rejects IBM’s offer of US$1 billion to take over latter's chip-making business

Globalfoundries rejects IBM’s offer of US$1 billion to take over latter's chip-making business

According to Bloomberg, Globalfoundries has turned down a US$1 billion payout from IBM to take over the latter’s bleeding chip manufacturing business. The report also said that IBM CEO Ginni Rometty was keen to jettison the loss-making business as she was attempting to improve the bottom line of the company after “nine straight quarters of falling revenue.”

However, it wasn’t exactly a fire sale as she stopped short of acceding to Globalfoundries’ payout request of US$2 billion, which is double of IBM’s offer. As a result, talks between the two companies have been called off for the time being. The source, whom Bloomberg said was familiar with the entire process, said in June that IBM bleeds up to US$1.5 billion per year.

Hence, as long as the chip making business is under the wing of IBM, the company’s CEO will face challenges in meeting her 2015 earning goals. Therefore, according to a research firm that Bloomberg contacted, talks between the two companies may resume in the near future.

(Source: Bloomberg)

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