To counter U.S. export controls, Chinese regulators have slowed down their review of mergers and acquisitions by U.S. companies, including Intel’s takeover of Israeli chip firm Tower Semiconductor.

(taken from the Internet)

[Compile Lu Yongshan/Comprehensive Report] According to the Wall Street Journal, as the relationship between the United States and China deteriorates, Chinese regulators have begun to review some proposed mergers and acquisitions involving American companies in the contest with the United States over access to advanced technology. The slowdown has also become the latest tool for the Chinese government to fight U.S. export controls.

Chinese regulators have recently slowed scrutiny of some proposed mergers and acquisitions by U.S. companies, including Intel's $5.2 billion takeover of Israel-based chip firm Tower Semiconductor and chip firm MaxLinear's $3.8 billion takeover of Taiwan's Silicon Motion, according to people familiar with the matter. , 2 The company has extended the deadline for completing the transaction to May 26, and it is possible to further extend the deadline.

Broadcom's $61 billion acquisition of cloud computing company VMware also awaits review by Chinese regulators,

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Officials at China's State Administration for Market Regulation have asked the companies involved to provide products in China that they sell in other countries as a prerequisite for approving the deal, these people said.

Since the United States has passed a bill restricting American companies from selling chips to China and expanding the production of certain chips in China, these demands from China may put American companies in a dilemma.

For multinational companies, the threshold for triggering anti-monopoly review by Chinese regulators is very low.

For example, if two companies involved in an M&A transaction earn more than $117 million in annual revenue from China, the merger will require approval from the Chinese government.

Multinational executives and their affiliated industry associations say China has more frequently used the merger review process and antitrust rules in recent years to advance its own political and economic goals, and while Chinese regulators have rarely blocked deals outright, they have resorted to delay and the practice of suspending censorship until requirements are met, which often benefit Chinese companies at the expense of foreign competitors.

Chinese officials see the merger review as a relatively subtle and low-cost way to put pressure on foreign companies, which in turn pressure their governments.

Amy Celico, head of Albright Stonebridge, a Washington-based consultancy for multinational corporations, said: "Today, global M&A deals are more difficult to get Chinese approval because China The government has less leverage to put pressure on foreign companies."

In November last year, DuPont canceled the $5.2 billion acquisition of Rogers, a specialist manufacturer of electronic materials, because it failed to obtain regulatory approval in China, and DuPont paid Rogers a $162.5 million transaction termination fee.

A report released by the American Chamber of Commerce in 2022 pointed out that even if the delay in China’s merger review does not lead to the suspension of transactions, it will increase the operating costs of related US companies. These US companies have to pay excessive costs to cope with the risk of China’s long review .

Albright Stonebridge Group warned that the increase in costs may lead to more foreign companies planning to withdraw capital from China.