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Intel, a prominent American technology company, has made the significant decision to cancel its planned acquisition of Tower Semiconductor, an Israeli chip manufacturer. The cancellation was primarily driven by China’s failure to grant approval for the deal, and this decision was reached through mutual agreement between Intel and Tower Semiconductor.
The main obstacle cited for the cancellation was the inability to secure the necessary regulatory clearances within the specified timeframe as outlined in the merger agreement. To conclude this termination, Intel will pay Tower Semiconductor a termination fee amounting to $353 million.
The acquisition deal required approval from various regulatory bodies around the world, including China. However, Chinese regulators did not provide the necessary clearance before the designated transaction deadline.
This development occurred in the midst of growing tensions between the United States and China. Specifically, the United States has been implementing stricter export controls and imposing restrictions aimed at limiting China’s ability to acquire and produce advanced semiconductor chips, which are crucial components for various technological applications.
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Stock Price Decline
Originally, Intel had set out to finalize the acquisition during the first quarter of the year. However, due to the challenges encountered in obtaining approval from China, the company extended the deadline. Despite these efforts, the Chinese regulatory authorities did not give their approval, ultimately leading to the cancellation of the deal.
This cancellation had immediate repercussions for Tower Semiconductor’s financial performance. The company’s stock prices experienced a significant decline both in the U.S. market and in Tel Aviv, where the company is based. The market’s reaction highlights the impact of such a decision on the financial stability and perception of the involved companies.
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Source: AP
