Valued at 1.4 billion U.S. dollars! Zhilu Capital`s acquisition of MagnaChip terminates

Today (December 14), South Korean semiconductor manufacturer MagnaChip announced that it has withdrawn the transaction declaration from the Committee on Foreign Investment in the United States (CFIUS) and has decided to terminate its acquisition by Wise Road Capital, a Chinese investment fund.
MagnaChip said that despite months of hard work, both parties to the transaction were unable to obtain CFIUS's approval for the merger, so they took this action.

The announcement pointed out that after the termination of the agreement between the two parties, Zhilu Capital will pay MagnaChip US$70.2 million in break-up fees, 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.

It is understood that MagnaChip's predecessor was the non-storage department of SK Hynix, which was separated in October 2004. In 2011, MagnaChip was listed on NASDAQ in the United States. MagnaChip mainly deals in display drive semiconductors and general power management semiconductors.

On March 29 this year, MagnaChip announced that it would accept the acquisition proposal of Zhilu Capital. Zhilu Capital will acquire all of MagnaChip's shares at a price of $29 per share for a total purchase price of $1.4 billion.

It is reported that since the announcement of the acquisition, the Ministry of Trade, Industry and Energy of South Korea first launched an investigation into the case in April, and CFIUS followed closely. CFIUS formally intervened in the investigation of the case in May, and later stated in October that the review of the case was postponed to December 13.

After 8 months of investigation, the acquisition was declared terminated. As for the result of this transaction, MagnaChip CEO YJ Kim said that this result will not affect the company's good long-term fundamentals of the business and the ability to accelerate the MX3.0 strategy. In fact, in the past eight months, the company team has continued to advance the previously announced plans for sustainable and profitable growth for 2020-2023.