American semiconductor firm Xcerra calls off sale to Chinese fund after hitting US regulatory wall
The two firms decide to end the US$580m deal as regulatory approval is unlikely
Xcerra, a US semiconductor company, has cancelled its US$580 million sale to a Chinese government-backed fund in yet another case of US regulators blocking Chinese takeovers of US tech firms amid the Trump administration’s toughened stance on such deals citing national security concerns.
Massachusetts-based Xcerra announced last year that Hubei Xinyan Equity Investment Partnership had agreed to buy the company’s all outstanding shares for US$10.25 per share in cash, which valued it about US$580 million.
“After careful review of feedback received from CFIUS [the Committee on Foreign Investment in the United States] that approval of the merger is highly unlikely and further discussions between the company and parent, the parties determined to cease efforts to seek CFIUS clearance and entered into a termination agreement,” Xcerra said on Friday in a filing to the US Securities and Exchange Commission (SEC).
No termination fees will incur, it added.
“Our transaction with Xinyan was about enabling Xcerra to accelerate its growth in the China market as well as broadening and strengthening our customer relationships around the world,” said Dave Tacelli, president and CEO of Xcerra, in a separate statement. “While we are disappointed that we were not able to receive approval from CFIUS on this transaction, Xcerra and Xinyan are discussing alternatives to pursue opportunities in new and existing markets in China.”
The CFIUS is the inter-agency committee which examines deals for national security risks that could lead to control of a US business by a foreign company.