Intel has withdrawn from a major acquisition of an Israeli chipmaker due to its inability to secure the necessary regulatory approval.
The US tech giant announced in a statement on Wednesday that it would cancel its planned $5.4 billion acquisition of Tower Semiconductor (TSEM), claiming it did not receive the required regulatory approval in time. The agreement was first made public in February 2022.
While Intel (INTC) did not specify which jurisdiction it was awaiting, it had previously described efforts to get the deal approved with Chinese authorities.
In April, CEO Pat Gelsinger acknowledged that the procedure had been challenging and said he had traveled to China to try to advance things.
On an earnings call, Gelsinger stated, “as part of my recent trip to China, we continue to work hard to complete the Tower acquisition.”
The deal was supposed to be finalized within a year.
The deal has still not received approval from China’s competition regulator, 18 months after it was first announced, according to a report published on Wednesday by the Financial Times, which cited two unidentified sources.
According to law firms that counsel international businesses, businesses that want to merge must submit their proposed transactions for approval from Chinese regulators if they generate a certain amount of revenue from the country.
After US President Joe Biden introduced curbs to limit Beijing’s access to the crucial technology last October, tensions between China and the United States—including some of its allies in Europe and Asia—have increased over semiconductors.
The deal was canceled by mutual consent, according to statements from Intel and Tower, respectively.
Tower will now receive a $353 million termination fee from Intel in exchange for leaving, the California-based business said in the statement.
Following the announcement on Wednesday, Intel stock dropped 3.6% in New York, and Tower’s stock, which is traded on the Nasdaq, also fell 10.7%.
Although the two firms won’t be able to merge, Gelsinger said they will still “look for opportunities to work together in the future”.
Source-CNN
