Chinese state-owned semiconductor manufacturing supplier Naura Microelectronics Equipment Co., Ltd announced that it had completed a US$15 million acquisition of U.S. company Akrion Systems LLC, a supplier of surface preparation for solar and semiconductor devices.
The deal is said to be the first Chinese acquisition of a U.S. company to be approved by CFIUS under the Trump administration. It is a rare case amid toughened control and a slew of cancelled Chinese acquisitions in the U.S., but the deal’s small size seems to suggest it should not be taken as a signal that approvals will get any easier for Chinese investors in the U.S.
“From what we have learned, this is the first Chinese acquisition of a U.S. company to be approved by CFIUS under the Trump administration,” aid Gibson Dunn & Crutcher LLP partner Fang Xue, a deal lawyers representing Naura. "The case was approved within the standard 75-day review period without any refiling."
The CFIUS has tightened control over Chinese acquisitions, especially in critical high tech sectors such as semiconductors, artificial intelligence, robotics and aerospace. The high-profile transaction blocked last year was Chinese-backed investor Canyon Bridge Capital Partners LLC’s US$1.3 billion acquisition of American chip maker Lattice Semiconductor Corp.
Most recently, Alibaba’s Ant Financial Services Group also terminated its deal to acquire MoneyGram after failing to obtain approval from the CFIUS. There are still five major pending Sino-U.S. deals, including Tonghai Oceanwide’s proposed US$2.7 billion acquisition of Genworth Financial and GigaDevice’s planned US$946 million deal to buy Integrated Silicon Solution, as China Money Network’s previous reported.
Xue said the completion of the deal shows that Chinese acquisitions in the U.S. is not impossible, but she also points out that Naura’s successful case cannot imply that there will be more approved case for Chinese firms or semiconductor firms, as CFIUS’s review is case-by-case basis.
Last April, Chinese asset management firm Unic Capital announced to acquire American semiconductor and electronics manufacturer Xcerra Corporation and the case is still pending.
Akrion is a supplier of advanced surface preparation systems and processes used in the manufacture of solar, semiconductor and related devices. The company booked revenue of RMB80.4 million (US$12.5 million) in 2016, compared with RMB106 million (US$16.5 million) in 2015. It had net loss of RMB23.7 million (US$3.7 million) in 2016, compared with a net loss of RMB20.2 million (US$3.14 million) in 2015, according to a security filing of Naura Microelectronics Equipment’s parent company, Naura Technology Group Co., Ltd., a Shenzhen Stock Exchange-listed firm.
Xu added that it is not rare to see semiconductor firms with poor financial performance as they require capital investments, and it makes perfect sense for Chinese companies with strong financial background to acquire American firms with advanced technologies.