Status: Terminated
Acquirer: Wise Road Capital LTD (China)
Acquired: Magnachip Semiconductor Corporation (US)
Value: US$1.4 billion
Industry: Semiconductors
Update: On December 13, 2021, Magnachip Semiconductor Corporation and Wise Road Capital announced “that they received permission from the Committee on Foreign Investment in the United States (“CFIUS”) to withdraw their joint CFIUS filing in relation to their proposed transaction (the “Merger”) and will be terminating their previously announced definitive merger agreement.” (Magnachip Semiconductor Corporation, Form 8-K, Ex-99.1, Dec. 13, 2021, SEC Filing.) According to the announcement, “[t]his course of action resulted from the inability of the parties, despite months of effort, to obtain CFIUS’s approval for the Merger.” (Id.) “On December 20, 2021, the Merger Agreement terminated . . . .” (Magnachip Semiconductor Corporation, Form 8-K, Dec. 20, 2021, SEC Filing.)
Posted on September 19, 2021
Status: Withdrawn and Refiled
UPDATE: On September 10, 2021, the parties “asked CFIUS to permit them to withdraw and re-file their June 11, 2021 notice concerning the Merger, in order to permit further discussion with CFIUS concerning potential options for permanently mitigating risks to the national security that have been identified by CFIUS. By letter dated September 13, 2021, the Acting CFIUS Staff Chairperson notified the parties that CFIUS had granted this request and that a new CFIUS review period for the Merger would commence on September 14, 2021 and conclude no later than October 28, 2021.” (Magnachip Semiconductor Corporation Form 8-K, Sept. 14, 2021, SEC Filing.)
Posted August 2021
Status: Investigation
On August 27, 2021, CFIUS issued a letter to the parties that it “has identified risks to the national security of the United States arising as a result of the Merger,” but has “not identified any mitigation measures, including those proposed jointly by the [parties], that CFIUS believes would adequately mitigate the identified risks . . .” (Magnachip Semiconductor Corporation Form 8-K, Aug. 30, 2021, SEC Filing.) The letter from CFIUS further stated that “absent new information arising during the investigation period that alters CFIUS’s assessment of the national security risks or the feasibility of mitigation measures to resolve those risks, CFIUS anticipates that it will refer the matter to the President for decision . . .” (Id.)
Posted on June 16, 2021
Status: Interim Order; CFIUS Requested Review
On March 25, 2021, Magnachip Semiconductor Corporation (“Company”), a publicly traded (NYSE: MX) Delaware corporation based in South Korea that designs and manufactures analog and mixed signal semiconductors, entered into a merger agreement with “South Dearborn Limited, an exempted company incorporated in the Cayman Islands with limited liability (‘Parent’) formed by an affiliate of Wise Road Capital LTD (‘Wise Road’),” whereby Magnachip Semiconductor Corporation would survive as a wholly owned subsidiary of South Dearborn Limited. (Magnachip Semiconductor Corporation Form 8-K, June 16, 2021, SEC Filing.) On May 26, 2021, “the CFIUS Staff Chairperson, acting on the recommendation of CFIUS, requested that the parties file a notice concerning the Merger and thereby undergo formal CFIUS review of the Merger. The Company and Parent filed such notice with CFIUS on June 11, 2021.” (Id.) “Under the terms of the Merger Agreement, the parties’ receipt of the request from CFIUS to file a notice concerning the Merger results in the closing of the Merger now being conditioned on the receipt of CFIUS approval without the imposition of a burdensome condition as defined in the Merger Agreement.” (Magnachip Semiconductor Corporation Form 8-K, May 28, 2021, SEC Filing.) On June 15, 2021, the U.S. Department of Treasury, on behalf of CFIUS, issued an “Order Establishing Interim Mitigation Measures” (the “Interim Order”) to the parties to impose a standstill requirement on the parties until CFIUS either clears the transaction, the President declines to take action, or the President revokes or terminates the Interim Order.” (Magnachip Semiconductor Corporation Form 8-K, June 16, 2021, SEC Filing.)
The parties did not originally file with CFIUS and believed it did not require “any approvals . . . in the United States.” (Magnachip Semiconductor Corporation Form 8-K, May 28, 2021, SEC Filing.) Magnachip Semiconductor Corporation “is a holding company,” “[a]ll manufacturing and research and development activities take place in South Korea,” all sales operations are located outside the U.S. (in South Korea, China, Hong Kong, Taiwan, Japan and Germany), and all of the employees are based in South Korea or other locations “outside the United States.” (Magnachip Semiconductor Corporation Form 8-K, May 28, 2021, SEC Filing.)
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