GlobalFoundries Says IBM Demanding $2.5 Billion as IPO Nears - Bloomberg

GlobalFoundries Says IBM Demanding $2.5 Billion as IPO Nears - Bloomberg

GlobalFoundries Inc. asked a judge to rule that it doesn’t owe $2.5 billion to International Business Machines Corp. over a 2014 deal in which the semi-conductor maker agreed to take an unprofitable chip-manufacturing unit off IBM’s hands.

In a complaint filed Monday in New York Supreme Court, GlobalFoundries is seeking a declaratory judgment that it didn’t breach the agreement and said IBM is threatening to sue. The suit comes as GlobalFoundries works with banks on an initial public offering that could value the chipmaker at about $30 billion.

“This action arises out of what seems to be a misguided and ill-conceived effort by IBM’s law department to try to extract an outlandish payment,” GlobalFoundries said its complaint.

IBM agreed in 2014 to pay GlobalFoundries $1.5 billion for GlobalFoundries to acquire the unit. As part of the deal, GlobalFoundries became IBM’s exclusive provider of certain power processors for the next 10 years, in exchange for access to IBM’s intellectual property. GlobalFoundries acquired manufacturing facilities in East Fishkill, New York, and Essex Junction, Vermont.

GlobalFoundries is backed by Abu Dhabi sovereign fund Mubadala Investment Co. The chipmaker is coming to market as numerous industries complain they can’t get enough semiconductor supply and governments across the globe gear up to provide financial support for expansions in production.

A call and email to IBM wasn’t immediately returned.