News
The deal, announced in February this year, had a deadline of 15th August
Intel has mutually agreed to terminate its $5.4 billion deal to acquire Israeli chipmaker Tower Semiconductor after being unable to get timely regulatory approval, the companies said today.
Reports suggest that the termination of the deal has come after failure to get regulatory approval from the Chinese authorities (namely The State Administration for Market Regulation).
Due to the size and significance of this potential acquisition to the global semiconductor supply chain, regulatory bodies worldwide must give their approval. According to reports from the FT, sources close to the deal noted the extreme difficulty in obtaining Chinese approval for a US company to acquire a chip fabrication plant because of the strong export rules placed on Chinese firms, as well as the sour geopolitical relationship between the two countries.
“After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the August 15, 2023 outside date,” said Tower Semiconductor in a statement.
The two companies had a deadline of 15th August by which to complete the takeover; now this deadline has passed, Intel will be forced to pay Tower Semiconductor a termination fee of $353 million, as per the terms of their initial agreement.
Intel first announced its intentions to acquire Tower Semiconductor back in February 2022. The deal would see Intel use Tower Semiconductor’s technology to grow its own portfolio, global footprint, and manufacturing capabilities in an attempt to combat rising demand.
Intel CEO Pat Gelsinger said his respect for Tower Semiconductor “has only grown through this process and we will continue to look for opportunities to work together in the future.”
As regulatory blockages in such situations are not uncommon, the outcome is not totally unexpected. US listed shares in Tower Semiconductor have been trading below the proposed purchasing price of $53 for some time as confidence the companies would complete the deal began to dwindle. Shares of Tower Semiconductor fell around 9% in both the US and Israel this week.
Join the discussion on the global semiconductor industry at this year’s Total Telecom Congress – book your tickets here!
Also in the news:
Liberty Global and Infosys sign $1.64bn Horizon deal
Poland’s ‘largest ever’ broadband subsidy draws 300 applications
Italian government signs MoU to take minority stake in TIM’s NetCo
