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US Chipmaker Magnachip, China’s Wise Road End $1.4bn Merger

Magnachip, whose shares declined 1.8% at $16.81 in extended trading, will get a termination fee of $70.2 million, according to a joint statement


Magnachip
The US Treasury Department, seen here, said in August the deal posed "risks to national security", while the Committee on Foreign Investment in the United States (CFIUS) ordered the deal to be put on hold in June. Photo: Reuters.

 

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

 

 

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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

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