Fairchild rejects China Resources, Hua Capital buyout offer
US-based Fairchild Semiconductor International has turned down a $2.6 billion take-private bid from China Resources Microelectronics and Hua Capital.
Instead, the company endorsed an offer from its competitor ON Semiconductor, which proposed to acquire all Fairchild outstanding shares at $20.00 apiece in cash, lower than the $21.70 per share bid from the Chinese consortium. Fairchild said in a filing that it rejected the higher offer because of "an unacceptable level of risk" that approval would not be forthcoming from the Committee on Foreign Investment in the United States (CFIUS).
"Specifically, the board believed that the [Chinese] consortium's proposed $108 million CFIUS reverse termination fee would not adequately justify risking the company stockholder premium present in the ON Semiconductor transaction," it explained.
Beijing-based Hua Capital was founded by an investment team from Tsinghua Holdings and China Fortune-Tech Capital, and primarily focuses on investments in the semiconductor industry.
In March last year, Hua Capital participated in a consortium led by Chinese GP SummitView Capital to buy US-listed semiconductor manufacturer Integrated Silicon Solution (ISS). Earlier this month, it completed an acquisition of US-listed chipmaker OmniVision Technologies, alongside CITIC Capital and Goldstone Investment.
Tsinghua Unigroup, the Chinese state-owned investment firm of Tsinghua University, is also aggressively pursuing acquisitions in the US semiconductor sector. Last year, it acquired a 5% stake in US-based disk driver manufacturer Western Digital (WD) for $3.78 billion. WD then acquired US chipmaker SanDisk Corp. Unigroup also reportedly offered $23 billion for Micron Technology but was rebuffed due to national security concerns.
Last month, CIFIUS blocked a $3.3 billion sale of Philips' LED components and automotive light unit to Chinese PE firm Go Scale Capital.
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