back to article Beijing's silent treatment topples Tower Semiconductor merger with Intel

Intel's planned $5.4 billion buy of Israeli chip biz Tower Semiconductor has fallen through after the vendor failed to get regulatory approval from China within the time frame for the deal to close. The incident is being seen as payback from Beijing for US semiconductor sanctions against China. The two companies announced 19 …

  1. heyrick Silver badge

    Quick question

    Why does Intel need to cough up cash when somebody else somewhere else effectively blocked the merger from happening?

    1. Lurko

      Re: Quick question

      Because Intel were so foolishly confident and impetuous that they signed a contract with massive break penalties even if the deal didn't go ahead for reasons outside Intel's control. The £353m isn't the only cost because all Intel's advisors and bankers will still be seeking most of their fees. If that's only 1% of the deal costs that's another $54m, but given the advanced stage the deal got to, I'd hazard a guess Intel will be on the hook for double that, pushing the costs of this misguided corporate adventuring towards half a billion quid (and that's before any shareholder litigation).

      You'd have to be a complete idiot to sign a deal like that. Or just somebody who doesn't give a tinker's cuss about burning well over a third of a billion dollars of shareholder's cash.

    2. Spazturtle Silver badge

      Re: Quick question

      This is normal in mergers, the 'buying' side agrees to cover the administrative costs and loses that the 'selling' side incurrs as a result of the merger process.

      1. Lurko

        Re: Quick question

        It's only normal when you're dealing with a buying company run by idiots, although I'll grant you that's sadly common, especially with cash rich globo-corporations spending other people's money. I've been involved in M&A where there's been no break fee. Seems to occur when the seller's advisors spot that the buyer is a slavering idiot, blind to everything except the idea of making an acquisition.

        Both buyer and seller hope to gain something through a transaction. What genuine logic is there for one side to cover the other's costs in any event? Any director would have to be a total Jeremy Hunt to sign on for huge liabilities in respect of events outside their control. What would have happened if Intel had said no to break clauses? Tower would have had to either accepted their share of the risk or walked away, and if the latter who else was going to be popping up with five billion in cash, and a belief in "strategic fit"?

  2. Pascal Monett Silver badge

    Again, why a merger ?

    Couldn't they have just signed commercial agreements with binding partnership clauses ?

    Everything has to be a merger these days, nobody knows how to play nice any more.

  3. xyz123 Silver badge

    Just dump China. they're internally in collapse so "high tech" isn't a priority. Not when you have over 500 MILLION unsold apartments so badly constructed they're already crumbling into dust.

    1. Anonymous Coward
      Anonymous Coward


      Better 500 million (seriously???) empty apartments that crumble into dust.

      Please refresh my memory about the tragedy of a block of occupied apartments that collapsed in, I believe, Florida due to cheaped out construction.

      1. GraXXoR

        You’re seriously trying to compare an apartment block collapse in the US to a multi trillion dollar collapse of an entire economic pillar that is the China real estate Ponzi?

        P.s. occupied buildings collapse, burn down, explode, fall over all the time in China. It’s so common it’s hardly even news at this point.

  4. david 12 Silver badge

    Why did they need China approval?

    Lots of mergers go ahead without anyone asking China about it. What's special about foundries, or these companies, that they needed Chinese regulatory approval?

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