Status: Presidential Review
Acquirer: Fujian Grand Chip Investment Fund LP (China); Zhendong Liu (China)
Acquired: Aixtron SE (Germany)
Value: Approximately 670 million Euro
On November 18, 2016, Aixtron SE, a German based global provider of equipment to the semiconductor industry, announced that the investigation period for the Committee on Foreign Investment in the United States (CFIUS) to review the tender offer by Grand Chip Investment GmbH (“GCI”) lapsed on November 17, 2016, the matter has now been passed along to U.S. President Obama for decision in line with CFIUS statutes. (See Aixtron Form 6-K, Ex-99.1, Nov. 18, 2016, SEC Filing; Aixtron Press Release, Nov. 18, 2016.) President Obama now has 15 days to make a decision.
According to Aixtron’s announcement: “[CFIUS] informed GCI and Aixtron that, from CFIUS’ perspective, there are unresolved U.S. national security concerns regarding the proposed transaction. CFIUS informed the parties that it plans to recommend to the U.S. President that the transaction be prohibited based on CFIUS’ conclusion that there would be no reasonable way to mitigate the U.S. national security risks perceived by CFIUS on the basis of the mitigation proposals submitted by the parties to date. As a consequence thereof, CFIUS recommended the parties request withdrawal of their notice and abandon the entire transaction.” (See Aixtron Form 6-K, Ex-99.1, Nov. 18, 2016.) The parties have “decided not to follow such recommendation . . . . [and] as a result of which the matter has been referred to the U.S. President for decision in line with CFIUS statutes.” (See id.) In addition, the parties “plan to continue to actively engage in further discussions to explore means of mitigation that may be amenable to CFIUS or the U.S. President to resolve outstanding U.S. national security concerns or to take other alternative measures that could allow the parties to proceed with the transaction.” (See id.) Although CFIUS’ concerns have not been stated, The New York Times reported that “[o]ne possibility is Aixtron’s leading position making technology that creates chips based on an advanced semiconductor material called gallium nitride.” (See Mozur, Paul, Showdown Looms as U.S. Questions Chinese Deal for Aixtron, New York Times, Nov. 19, 2016.)
GCI is a wholly owned indirect subsidiary of Fujian Grand Chip Investment Fund LP, which is 51% held by a Chinese national Zhendong Liu and 49% by a Chinese entity, Xiamen Bohao Investment Ltd. (See Aixtron Press Release, May 23, 2016.) GCI made a tender offer to acquire Aixtron on May 23, 2016, for a total value of 670 million Euro, representing a 50.7% premium to three-months volume weighted average share price prior to announcement. (See Aixtron Form 6-k, Ex-99.1, May 23, 2016, SEC Filing.) According to the Offer Document, CFIUS Approval is a condition of the deal. (See Offer Document at Aixtron SC TO-T/A, Ex-99.(A)(1)(A), Aug. 2, 2016.)