Magnachip ends merger deal with China’s Wise Road
US$1.4 billion deal falls through Magnachip to collect termination fee
Magnachip said on Tuesday that it has ended its merger deal with Chinese private equity firm Wise Road Capital.
The Chinese firm had planned to pay US$1.4 billion to merge with the chip company, with the pair signing the merger agreement in March.
However, Committee on Foreign Investment in the United States (CFIUS) had ordered the deal to be put on hold in June, saying at the time if needed to evaluate the deal to see if it posed risks to national security.
Two months after that, the US Treasury Department said the deal was a risk to the national security of the US.
"This course of action resulted from the inability of the parties, despite months of effort, to obtain CFIUS's approval for the merger," Magnachip and Wise Road said.
Wise Road will be paying Magnachip a termination fee of US$70.2 million __ US$51 million will be paid immediately, while the rest will be paid by March 2022.
Magnachip will also withdraw its request to evaluate the deal made to South Korea’s Ministry of Trade, Industry and Energy, it said.