Intel to abandon TowerSEMI acquisition
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Update time : 2023-08-18 11:21:16
Intel is expected to abandon its plan to buy Israeli foundry chipmaker TowerSEMI for $5.4 billion, as the clock ticks down to get regulatory approval.
Sources familiar with the matter said the deadline for the deal is midnight California time on August 15, and the companies do not expect to receive approval from China by then. Separately, Intel does not intend to negotiate an extension of the contract and will instead pay Tower a $353 million breakup fee, according to Reuters sources.
When Intel initially announced its plans to acquire Tower Semiconductor, it said it would close the deal within 12 months, in mid-February 2023. But with China's State Administration for Market Regulation (SAMR) yet to approve the deal, the companies extended the deadline for the transaction, extending the acquisition period to mid-June and then again to August 15th. So far, SAMR has not formally approved the deal, and if it does not do so by that date (August 15), Intel and Tower will have to either extend the "closing period" again or cancel the deal.
Intel CEO Pat Kissinger (Pat Gelsinger) recently flew to China, trying to convince Chinese regulators to approve the deal, but the results are unknown.
Foreign media reports analyze, in theory, the company can agree to extend the acquisition termination date, as long as they jointly decide. In practice, however, several factors limit the feasibility of extending the closing date indefinitely. For example, in many jurisdictions, regulators approve mergers and acquisitions for a specific period of time. If a company continues to extend the closing deadline, it could raise red flags or lead to additional scrutiny. If the deal is not approved in China by Aug. 15, Intel and Tower may have to resubmit their proposal to regulators in the U.S. or Europe in order to extend the closing deadline.
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