Legal

Trump Blocks Chinese Acquisition Of Chip Maker

The decision by President Donald Trump to block a Chinese fund’s takeover attempt of a U.S. semiconductor company may presage further vetoes of cross-border deals involving Chinese buyouts of stateside entities.

The Wall Street Journal and other financial news sources report that Trump took “the rare step” of giving a thumbs down to private equity firm Canyon Bridge Capital Partners (in turn backed by a Chinese asset manager) in its attempt to buy Lattice Semiconductor for $1.3 billion.

How rare is the move? This is only the fourth time in 27 years that the president has blocked a foreign purchase of a U.S. firm, as a Bloomberg news report stated. The Trump administration’s move comes after consideration of the findings of a panel (comprised of members from the Defense, Homeland Security and Treasury departments) that had studied the deal and discovered negative implications for national security.

Canyon and Lattice had asked the president to override that finding, a request that clearly did not bear fruit.

The official White House position, released via a statement, is that the deal was rejected due to the “potential transfer of intellectual property to the foreign acquirer, the Chinese government’s role in supporting this transaction, the importance of semiconductor supply chain integrity to the United States government, and the use of Lattice products by the United States government.”

Separately, Steve Mnuchin, who serves as U.S. Treasury Secretary and also as chairman of the Committee on Foreign Investment in the United States, said that the CFIUS process remains focused on security concerns.

The rejection may not bode well for Chinese bids for U.S. firms. One standout might be another deal on the table, as Ant Financial has proposed to buy MoneyGram. The impact was felt right after Trump’s decision on Wednesday, as MoneyGram shares slipped more than four percent, as Bloomberg reported.

Back in May, MoneyGram holders backed the $1.2 billion deal, which would help the company’s physical operations expand its digital realms. In an interview with PYMNTS’ Karen Webster, MoneyGram CEO Alex Holmes stated that “working with the added reach of the more than 600 million consumers who use Ant Financial’s services will no doubt give consumers more access to financial inclusion.”

Commenting on the regulatory process, the executive said that “MoneyGram implements stringent data protection policies to protect consumer privacy and comply with all applicable laws, including next-generation firewalls, security alert management tools and strong endpoint controls; and those protections we have today will remain in place … moreover, Ant Financial is committed to maintaining and bolstering these safeguards, including the continued storage of MoneyGram’s U.S. customer data on U.S. servers.”

Bloomberg reported that the aforementioned security panel has helped scuttle other deals flowing from China, among them T.C.L. Industries Holdings’ buy of mobile broadband operations from Inseego Corp.

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