HOME-GROWN chip-maker Chartered Semiconductor Manufacturing will be acquired by an investment firm owned by the Abu Dhabi government in the biggest privatisation deal this year.

Chartered, which operates six chip-making facilities here employing more than 6,000 workers, on Monday morning announced that the Advanced Technology Investment Company (Atic) has made an offer of $2.68 per share, as part of a bid to privatise the loss-making chip-maker by the end of the year.

With Chartered's biggest shareholder Temasek Holdings having signed an 'irrevocable undertaking' in support of the $5.6 billion deal, there is a good chance it is a done deal.

Temasek has a 62 per cent stake in the world's third largest chip-maker, so its approval puts the deal just 13 per cent shy of the 75 per cent shareholder approval mark.

If Atic succeeds, Chartered will become a wholly owned subsidiary and delisted from both the Singapore Exchange's mainboard and the American Nasdaq exchange where its shares are traded.

Beside the $2.5 billion it will pay for the shares, Atic would also take over $3.1 billion in debt and convertible redeemable preference shares.

Chartered chief executive Chia Song Hwee said that there would not be 'major redundancies.'

In fact, the additional resources which come with the deal will allow the 22-year-old company to 'increase capacity' at its newest facility, although there is no set timeline for doing this, said Mr Chia, who will become the chief operating officer of the company, formed from the combination of Chartered and Atic's chip-making arm, Globalfoundries.

Atic paid US$2.1 billion (about S$3 billion) earlier this year for 55.6 per cent stake in Globalfoundries, a joint-venture with Advanced Micro Devices. Globalfoundries has plants in Germany and one under construction in New York.

Together, Chartered and Globalfoundries will be the world's second largest chip-maker by capacity, overtaking current No.2 United Microelectronics Corp but still lagging No1. chip-maker Taiwan Semiconductor Manufacturing Co (TSMC).

Globalfoundries chief executive Douglas Grose, who will head the merged entity, said there would be significant synergies.

For instance, being an mature 'full service foundry', Chartered had all the necessary customer-facing functions like sales, which the relatively newer Globalfoundries lacked, he said.

Chartered, which was listed in 1999 on the Singapore Exchange's mainboard to much fanfare, did not fare well in the years that followed though.

In recent years, Chartered bled red ink almost every financial quarter and reported a US$39.4 million loss for the quarter ended Jun 30.

Earlier this year, it had to retrench 500 employees this year as a cost-cutting measure in the face of faltering demand, although orders are beginning to pick up.

Despite this, its shares have more than doubled this year on speculation of a takeover bid.