As China delays review, Intel scraps $5.4 bln Tower deal
By MYBRANDBOOK
Intel Corp has scrapped its $5.4 billion deal to buy Israeli contract chipmaker Tower Semiconductor Ltd after their merger agreement expired without regulatory approval from China. Following the development, U.S.-listed shares of the Israeli company fell about 11% in premarket trading. Intel, which had decided to buy Tower last year, will pay a termination fee of $353 million to the latter.
"After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the August 15, 2023 outside date," Tower Semiconductor said in a statement.
The development underscores how tensions between the United States and China over issues including trade, intellectual property and the future of Taiwan are spilling over into corporate dealmaking. This stands true especially in terms of technology companies.
Last year, DuPont De Nemours Inc scrapped its $5.2 billion deal to buy electronics materials maker Rogers Corp after delays in securing approval from Chinese regulators.
Intel Chief Executive Pat Gelsinger had said he was trying to get the Tower deal approved by Chinese regulators and had visited the country as recently as last month to meet with government officials.
Gelsinger however said Intel was investing in its foundry business, which makes chips for other companies, irrespective of the Tower deal.
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