Almost a year and a half have gone by since it was reported that US microchips giant Intel would buy Israel’s Tower Semiconductor (TASE: TSEM; Nasdaq: TSEM) at a valuation of $5.4 billion. The timetable for completion of the deal ran out yesterday, and now Intel has officially announced that it has been cancelled by agreement.
Intel states that the cancellation was "due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement, dated Feb. 15, 2022." The difficulties were reportedly with Chinese regulators. Under the terms of the merger agreement, Intel will pay Tower Semiconductor a termination fee of $353 million.
Cancellation of the deal was widely anticipated by the market.
Trading in Tower Semiconductor shares was suspended on the Tel Aviv Stock Exchange at 10:31 this morning, at which point the company's share price was down 10.17% at NIS 113.
Intel CEO Pat Gelsinger said, "Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy. We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs.
"Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future."
Tower Semiconductor CEO Russell Ellwanger said, "Tower was very excited to join Intel to enable Pat Gelsinger’s vision for Intel’s foundry business. We appreciate the efforts by all parties. During the past eighteen months, we’ve made significant technological, operational, and business advancements. We are well positioned to continue to drive our strategic priorities and short-, mid- and long-term tactics with a continued focus on top and bottom-line growth."
Intel was to have acquired Migdal Ha’emek based Tower Semiconductor in order to expand its production capacity and extend its foothold in a new portfolio of products. Tower Semiconductor specializes in producing analog chips - fairly simple chips used as electronic sensors in a variety of installations, such as vehicles, medical imaging devices, and cameras.
At the time of the deal, Intel said that Tower Semiconductor’s unique RF technology, its design and development partnerships, its intellectual property, and its geographical spread, fitted Intel’s business strategy, and that it had therefore agreed to pay over $5 billion for the company.
Completion of the deal has, however, been deferred time after time, and in the meanwhile Tower Semiconductor’s share price has fallen below the deal price, which led many analysts to say that they did not believe that he deal would be completed in the end.
Published by Globes, Israel business news - en.globes.co.il - on August 16, 2023.
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