STMicroelectronics NV and Intel Corp. delayed the merger of their unprofitable memory units and said the venture will get less financing than previously announced.
The transaction, which also includes an investment from buyout fund Francisco Partners LP, now probably will be completed by March 28, Geneva-based STMicroelectronics said in a statement Wednesday. The original deadline had been year-end.
Credit markets have deteriorated since STMicroelectronics, Europe's largest maker of semiconductors, and Intel, the world's biggest, started planning the combination. The merger would create the biggest maker of flash memory chips that store software in mobile devices, helping the company combat a slump in prices and take sales from rivals.
"The three parties continue to work to satisfy the conditions to closing for the transaction," the statement said. The companies have bank commitments for financing "following the significant turmoil in the debt capital markets."
STMicroelectronics will receive a smaller payment for its contribution to the business than expected, the statement said. Maria Grazia Prestini, a spokeswoman, couldn't be reached by telephone in her office in Geneva and didn't respond to an e-mail. Stanley March, an investor relations executive in New York, didn't return a call.
Intel fell 2 cents to $27.29 at 10:51 a.m. New York time in Nasdaq Stock Market trading. STMicroelectronics fell 30 cents to 9.87 euros in Paris trading Dec. 24. Stock markets in Europe are closed Dec. 26.
The combined company, to be called Numonyx, would have $3.6 billion in annual sales, STMicroelectronics and Intel said in May when they announced the venture. That would make Numonyx bigger than market leader Spansion Inc.
The revised financing terms for the transaction include a senior loan of as much as $650 million and a $100 million revolving credit facility for Numonyx, STMicroelectronics said. In May, the companies said Numonyx would get a $1.3 billion loan from a consortium of banks and a $250 million revolving credit.
The new financing arrangements will result in changes to the joint-venture agreement, and those are still being negotiated among STMicroelectronics, Intel and Francisco, Intel said in a regulatory filing Wednesday.
STMicroelectronics will get 48.6 percent of Numonyx's shares, plus $364 million in a combination of cash and long-term notes when the deal closes, the statement said. The cash portion will be no more than $130 million, STMicroelectronics said.
Previously STMicroelectronics had said it would get a 48.6 percent stake plus $468 million, while Intel would have 45.1 percent and get a $432 million payment.
Intel won't forecast how much money it will get from the transaction, spokesman Chuck Mulloy said.
"We'll wait and see when we get the terms all finalized," he said.
STMicroelectronics recorded expenses of $857 million in the second quarter to write down the assets of the flash-memory business. There will be "adjustments" to that loss in the fourth quarter, STMicroelectronics said Wednesday.
Under the new terms, Numonyx will have a similar level of net cash with lower indebtedness than originally anticipated, the company said.
As previously announced, Francisco Partners, a Menlo Park, California-based buyout fund, will invest $150 million for a 6.4 percent stake in Numonyx.
The companies already have received approval for the deal from the U.S. Federal Trade Commission and European antitrust regulators.