Recently, the U.S. semiconductor investment testing firm Xcerra said that the U.S. Foreign Investment Commission (CFIUS) has prevented the company from selling the semiconductor investment fund Hubei Xin Yan, a Chinese government-backed semiconductor investment fund, for a consideration of 580 million U.S. dollars. Both parties decided to terminate the agreement after unanimously negotiation M & A.
Hsinchuang Xincra acquisition of the case has gone through many twists and turns Although Xcerra itself does not produce chips, but for the production of semiconductor testing equipment.
In April 2017, Xcerra had agreed to sell 580 million U.S. dollars to Unic Capital Management, a China-based investment management firm, and the transaction was subject to CFIUS approval, although the latter did not specify Approves the Xcerra transaction within 75 days before Xcerra resubmits the application to CFIUS, allowing Xcerra another 75 days to await approval.
On August 17, it was reported that the acquisition was likely to change halfway because of concerns about national security and Cohu, another U.S. rival, tried to stymie in an attempt to stop Xcerra from crossing the door. Cohu made a small report directly to CFIUS pointing to a Chinese acquisition of Xcerra National security concerns.
In response to the allegations, Xcerra said in response to a query from Reuters that Cohu's affair is nonexistent as Xcerra does not own any of its customers' key IPs and that the semiconductor company does not share important information with test plants or agencies.
On Thursday, Xcerra said it agreed with the Chinese semiconductor investment fund Hubei Xin Yan to cancel the merger plan after it determined CFIUS will not approve the transaction. "Our deal with Xin Yan could have enabled Xcerra to accelerate its growth in China while expanding Strengthen our customer relationships around the world. "Xavera CEO Dave Tacelli explained in a statement on Thursday that" although we are disappointed with failing to obtain CFIUS approval, Xcerra and Hubei Xin Yan will discuss alternative solutions to find in China Opportunities in existing and new markets. '
Under the terms of both parties, Xin Yan does not have to pay Xcerra break-even fees because CFIUS blocked the deal, though such break-even fees are also commonplace in mergers and acquisitions.
According to people familiar with the matter, CFIUS was concerned that the device Xerra used for chip makers was part of the U.S. government and the military supply chain, which blocked the deal.
CFIUS is becoming more cautious about China's takeovers of U.S. companies after the new President Trump came to power, CFIUS, an inter-departmental agency that conducts safety reviews of transactions that may involve the flow of sensitive technology to countries outside the United States, after a previous yellowing Ant Financial Services acquisition of the United States fast money transfer service company MoneyGram.
As Trump seeks to put pressure on China and looser trade and foreign exchange issues, CFIUS's stance has become tougher as the political vacancies in some U.S. government departments and agencies have made it more difficult for CFIUS to approve the deal.
Previously, CFIUS has blocked many Chinese acquisitions of US semiconductor business transactions.
Canyon Bridge Capital Partners LLC, a private equity firm financed by the Chinese government and headquartered in the United States, was also blocked by CFIUS last year when its $ 1.3bn acquisition of Lattice Semiconductor Corp, a US chip maker.
Beijing-based North China Microelectronics Co., Ltd. completed a deal in January to acquire Akrion Systems LLC, a US semiconductor fabrication equipment company, however, for only $ 15 million, a U.S. government approval of Chinese companies Fang Xue, a partner at Gibson Dunn & Crutcher LLP, a U.S. law firm, said, 'As far as we know, this is the first time that the CFIUS has approved Chinese companies to acquire U.S. businesses after the Trump administration took office.'