Today, South Korea’s Magnachip (Magna) semiconductor Corporation issued an announcement on its official website, officially terminating its acquisition agreement with China Zhilu Capital.
The announcement stated that despite months of hard work, the two parties were still unable to obtain approval from the Committee on Foreign Investment in the United States (CFIUS) for the merger. Therefore, they could only take this action plan to terminate the acquisition.
After the termination of the agreement, South Dearborn, affiliated with Zhilu, will pay the company a termination fee of US$70.2 million, of which US$51 million will be paid immediately and US$19.2 million will be postponed to March 31, 2022. According to the merger agreement, both parties will relieve each other of all obligations related to the proposed merger transaction and any claims arising from or related to the merger agreement.
Magnachip CEO YJ Kim said: “Although we are disappointed with the termination of the merger agreement, we believe that Magnachip, as an independent public company, is still capable of creating value for our shareholders.” “This result will not affect our business. The long-term fundamentals of the company and our ability to accelerate the MX 3.0 strategy. In fact, in the past eight months, our team has continued to advance our previously announced plans for sustainable and profitable growth for 2020-2023.
Review of the acquisition of Magnachip by Zhilu Capital
On March 27, South Korean chip manufacturer Magnachip Semiconductor Corp. announced that it has reached a final agreement to be acquired by Chinese private equity firm Wise Road Capital in a private transaction of approximately US$1.4 billion.
According to the agreement, Magnachip’s existing shareholders will receive $29 per share in cash, a 75% premium to the company’s three-month weighted average share price. Magnachip’s board of directors unanimously approved the agreement and recommended that the company’s shareholders vote in favor of the transaction, which may be completed as early as the second half of this year. The buyer plans to delist it from the New York Stock Exchange after initiating the sales process. After the transaction is completed, the company’s headquarters will remain in South Korea. Advisors for the transaction include JP Morgan and the seller’s domestic law firm Kim & Chang. Buyers include BMO Capital Markets and local law firm Lee & Ko.
The transaction was originally planned to be completed in the second half of 2021, but it was subject to customary closing conditions, including receiving approval from shareholders and regulatory authorities.
About Magnachip Semiconductor Corporation
Magnachip, formerly the system integrated circuit business of Hynix Semiconductor, is currently a system chip company and a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, Internet of Things, consumer, industrial and automotive applications. It has strong strength in OLED Display driver integrated circuit (DDIC) chips and power supply solutions. It is a global leader in the OLED DDIC chip market for non-exclusive companies.
The company has been strengthening the development of automotive power solutions. With more than 40 years of operating history, Magnachip has approximately 1,200 registered patents and patents pending, and has extensive engineering, design and manufacturing process expertise.
Previously, the company also operated a chip foundry business, but last year it sold it to a consortium led by Korean domestic private equity firms Alchemist Partners and Creative Partners. SK hynix also indirectly participated in the transaction through a special purpose company established by an investment consortium.
About Zhilu Capital
WiseRoad Capital is a global private equity firm that invests in leading technology companies. The company works closely with companies on multiple major themes including smart cities, smart manufacturing, and renewable energy, and is committed to discovering opportunities for technologies that support global urbanization and smart and green living. Zhilu Capital, through its investment and an international management team with industry and investment expertise, is committed to building a healthy international ecosystem around these key themes.