Intel scraps $5.4 billion Tower deal after China review delay
Intel Corp scrapped its $5.4 billion deal to buy Israeli contract chipmaker Tower Semiconductor Ltd after their merger agreement expired without regulatory approval from China. US-listed shares of the Israeli company fell about 11% in premarket trading. Intel, which had decided to buy Tower last year, will pay a termination fee of $353 million to the latter, the company said in a statement.
«After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the August 15, 2023 outside date,» Tower Semiconductor said in a statement. The development underscores how tensions between the United States and China over issues including trade, intellectual property and the future of Taiwan are spilling over into corporate dealmaking, especially when it comes to technology companies. Last year, DuPont De Nemours Inc scrapped its $5.2 billion deal to buy electronics materials maker Rogers Corp after delays in securing approval from Chinese regulators.
Intel Chief Executive Pat Gelsinger had said he was trying to get the Tower deal approved by Chinese regulators and had visited the country as recently as last month to meet with government officials. But Gelsinger also said Intel was investing in its foundry business, which makes chips for other companies, irrespective of the Tower deal. In June, Israeli Prime Minister Benjamin Netanyahu announced that Intel had agreed to spend $25 billion on a new factory in Israel, the largest-ever international investment in the country.
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