GlobalFoundries Is Going Public Next Week. What to Know.

The chip maker GlobalFoundries is targeting a $25.1 billion valuation with its much anticipated initial public offering.

On Tuesday, the Malta, New York, company set terms for its pending offering. GlobalFoundries is offering 55 million shares at $42 to $47, according to the prospectus for the deal. It will trade under the ticker GFS on the Nasdaq.

GlobalFoundries is scheduled to price its IPO on Oct. 27, with trading beginning the next day, a person familiar with the situation said. The prospectus lists 16 investment banks as working on the offering;Morgan Stanley, BofA Securities, and JP Morgan are lead underwriters.

GlobalFoundries, owned by Abu Dhabi’s sovereign-wealth fund, is one of the most sought after IPOs of the year and will be a focal point in what is expected to be a busy fourth quarter. Rivian, the electric-vehicle truck maker backed by Amazon.com(ticker: AMZN) and Ford Motor (F) is expected to set terms for its IPO soon. It made public the prospectus for its offering earlier this month.

At $47 a share, GlobalFoundries’ valuation could soar to $25.1 billion. BlackRock (BLK), Columbia Management Investment Advisers, Fidelity Management & Research, Koch Industries, and Qualcomm (QCOM) are interested in buying $1.05 billion worth of Global shares at the IPO price, the prospectus said. Silver Lake, meanwhile, has agreed to buy $75 million worth of stock in a private placement.

GlobalFoundries makes integrated circuits that power electronic devices like cars, mobile phones, and personal computers. The company was formed in 2009 when Advanced Micro Devices(AMD) spun off its manufacturing operations.

AMD remains one of GlobalFoundries’ top 10 customers, along with Qualcomm, MediaTek NXP Semiconductors, Samsung Electronics and Broadcom, the prospectus said.

GlobalFoundries’ net losses from continuing operations were $1.35 billion in 2020, roughly flat compared with a loss of $1.37 billion in 2019. Net revenues dropped nearly 17% to about $4.9 billion in 2020, partly because of an accounting change and partly because GlobalFoundries sold a business in 2019, generating $291 million of revenue that year.

GlobalFoundries is also highly leveraged. Total debt stood at $2.2 billion as of June 30, the prospectus said.

Nearly half of the 55 million shares offered in the IPO are coming from Mubadala Investment Company PJSC, Abu Dhabi’s sovereign-wealth fund. Mubadala currently owns 100% of Global Foundries; it is offering 22 million shares. At $47, Mubadala could make $1.03 billion from the sale of shares, while its remaining holding could be valued at roughly $22.5 billion. The fund’s stake will drop to 89.4% after the offering and private placement, the prospectus said.

Mubadala didn’t immediately respond to messages seeking comment.