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Taiwan's GlobalWafers fails in bid to buy German peer Siltronic

Wafer maker to pay $56m termination fee after regulatory hurdle blocks deal

German's economy ministry says it did not have enough time to complete its investment review of GlobalWafers' bid for wafer-making peer Siltronic.    © Reuters

TAIPEI -- Taiwan's GlobalWafers says it will pay 50 million euros ($56 million) to Siltronic after its bid to take over its German peer failed to gain the needed regulatory approval.

GlobalWafers had until Monday to secure the final green light from Germany's economy ministry before the offer to Siltronic's shareholders expired. The ministry, however, said it did not have sufficient time to complete its review, thereby scuppering the deal.

"We have not been able to obtain the approval from the German government before the long stop date [of Jan. 31]," GlobalWafers CEO Doris Hsu said in a stock exchange filing on Tuesday. Her company is a key supplier of wafers to chipmakers including Taiwan Semiconductor Manufacturing Co., Samsung, Intel, STMicroelectronics and Infineon.

The CEO said the outcome was "very disappointing." GlobalWafers will continue to work with European customers while "analyzing the non-decision of the German government and consider its impact on our future investment strategy," she added.

The two companies agreed that GlobalWafers would pay a 50 million euro termination fee to Siltronic in the event of failure to obtain required regulatory approvals. Given the Taiwanese company's strong financial position, paying the fee will not have a serious impact, it said in its filing. 

Globalwafers confirmed that the more than 4 billion euro takeover offer by the Hsinchu, Taiwan-based wafer maker is now dead and that agreements that came into existence as a result of the offer will likewise be abandoned.

GlobalWafers first announced its bid to takeover Siltronic in late 2020 in a move to expand its market share and challenge leading Japanese peers. Over the course of the past 14 months, the Taiwanese wafer maker successfully obtained antitrust approvals from major economies such as the U.S., Japan, South Korea and Taiwan. On Jan. 22, it received the nod from China, which had been viewed as one of the highest regulatory hurdles for the deal.

Globalwafers is the world's third-largest wafer maker, after Shin-Etsu Chemical and Sumco, both of Japan. Wafers are basic substrate materials where semiconductors are fabricated.

The failed bid by GlobalWafers comes as major economies, including the U.S., Japan, China and Europe, are rushing to rebuild their own semiconductor supply chains to address national security concerns.

GlobalWafers said that it directly owns 13.67% of the shares of Siltronic and that there are no specific restrictions on how it can handle that stake following the failed acquisition attempt.

The 56.6% of outstanding Siltronic shares pledged during the acceptance period of the all-cash tender offer will be returned to their original owners without undue delay, expected to be by next Tuesday, the Taiwanese company said.

The German government on Monday said it was "not possible" to complete all the necessary review steps for the investment before the deadline, in particular those related to the antitrust approval granted last week by China.

GlobalWafers' bid is one of two high-profile acquisition attempts in the chip industry to come up against intense regulatory scrutiny. Nvidia of the U.S. announced in 2020 that it intended to buy U.K.-based Arm Holdings, but the deal has not shown signs of progress since.

However another key semiconductor tie-up -- Advanced Micro Devices' purchase of Xilinx, both of the U.S. -- finally cleared all regulatory approvals late last month.

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