Due to escalating tensions with the United States, China refused to approve the $5.4 billion deal for Intel to buy Israeli chipmaker Tower Semiconductor. As a result, the acquisition will no longer take place.
According to statements made by Intel and Tower on Wednesday, it was a mutual decision. The acquisition was scrapped, according to Intel, “due to the inability to obtain promptly the regulatory approvals required under the merger agreement.”
Tower will get a $353 million termination fee from Intel Corp.
China’s regulators, who were among those who had to approve the merger, failed not to do so by the transaction deadline of August 15, even though Intel CEO Patrick Gelsinger visited China last month to garner their support.
The tweet verifies the news:
Intel cancels $5.4B deal for Israeli chipmaker Tower Semi as contract expires without China's nod.
More details ➡️ https://t.co/jVnuV5ImZk📸 Reuters/Dado Ruvic pic.twitter.com/cIxAlXHsok
— The Jerusalem Post (@Jerusalem_Post) August 16, 2023
Intel-Tower Deal Falls Apart as China Balks
The partnership between the two businesses was abandoned when tensions between the United States and China were rising, especially in light of recent U.S. restrictions and increased export controls aimed at limiting China’s capacity to import and produce advanced technology.
As a result, it appears that China’s antitrust watchdog, the State Administration for Market Regulation, has been slow to approve mergers involving American corporations, including the Intel-Tower deal.
After failing to get approval from China, Intel revised its timetable from the first quarter to the end of the year. With the purchase of Tower, Intel aimed to increase its manufacturing capacity and create new business prospects for the company in the United States, Israel, Italy, and Japan.
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During American pre-market trade, the stock price of Tower decreased by more than 11%. The company’s stock price in Tel Aviv fell by more than 10%.
“Tower was very excited to join Intel to enable Pat Gelsinger’s vision for Intel’s foundry business,” said Tower Semiconductor’s CEO Russell Ellwanger. “We appreciate the efforts by all parties.”
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