Atmel has agreed the sale of its wafer fabrication operation in Heilbronn, Germany to Tejas Silicon Holdings (UK).
This is second European fab Atmel has sold in the last 12 months. It follows last year's sale of its North Tyneside facility in the UK.
The semiconductor company has also sold a wafer fab in Texas in 2007.
"This sale [Heilbronn] is another positive step forward in our efforts to rationalise manufacturing capacity and increase shareholder value," said Steven Laub, Atmel's president and CEO.
Atmel and TSH(UK) have also signed a supply agreement whereby Atmel will continue to procure products from the Heilbronn fab over a three year period.
Under the terms of the agreement, TSH(UK) has agreed to acquire Atmel's wafer fabrication operation, including equipment, other assets and certain employee related liabilities. TSH(UK) will also lease the facility and license fab process technology. The transaction is expected to be essentially neutral to Atmel on a cash flow basis, excluding transaction related costs.
Atmel said it expects to record charges of approximately $5m to $10m associated with impairment and a loss on the sale of assets, to be incurred over the third and fourth quarters of 2008.
As a result of this transaction, approximately 300 Atmel employees directly associated with fab operations and other support functions will become a part of TSH(UK).
The sale is subject to customary closing conditions and is expected to be completed in the fourth quarter of 2008.