Chinese private equity firm Wise Road Capital and US chipmaker Magnachip Semiconductor Corp have terminated their $1.4 billion merger agreement struck in March, the companies said in a joint statement on Monday.
The US Treasury Department said in August the deal posed “risks to national security”, while the Committee on Foreign Investment in the United States (CFIUS) had ordered the deal to be put on hold in June.
“This course of action resulted from the inability of the parties, despite months of effort, to obtain CFIUS’s approval for the merger,” Wise Road and Magnachip said on Monday.
Magnachip will get a termination fee of $70.2 million, according to the statement. Its shares were down 1.8% at $16.81 in extended trading.
The semiconductor firm also said it had adopted a limited-duration shareholder rights plan “to allow adequate time to evaluate all options”.
- Reuters with additional editing by Kevin Hamlin