2023-05-30 07:18:47 ET
Magnachip Semiconductor ( NYSE: MX ) said it is separating its display and power businesses into separate entities.
The decision follows approval by the company's board and strategic review committee.
Magnachip plans to carry out the so called 'Internal Split-Off" by establishing a new subsidiary (NewCo) under Magnachip Semiconductor Ltd. (Magnachip Korea), the company's operating subsidiary.
Under the transaction, all assets and liabilities of the display business will be contributed to NewCo in exchange for equity. Once the Internal Split-Off is completed, Magnachip Korea and NewCo will be separate operating companies, with NewCo being a wholly owned unit of Magnachip Korea.
Magnachip added that its Gumi fabrication facility will remain with Magnachip Korea as a main part of its power business.
"The internal separation is aimed at enhancing transparency, accountability and flexibility in business," said Magnachip's CEO YJ Kim. "Furthermore, this strategic move will allow each entity to allocate its resources, both financial and technical, more effectively to the specific needs of its customers."
Following separation, the board of Magnachip will continue to oversee both operating entities.
The two will remain indirect wholly owned subsidiaries of Magnachip, and the Internal Split-Off is not expected to have any material impact on the company's financial reporting, Magnachip noted .
The separation is expected to be completed in Q4 2023.
MX +4.78% to $11.17 premarket May 30
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Magnachip stock rises after plans to separate display, power businesses