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takyon writes:

China Weighing a Takeover Bid From an American Semiconductor – is it Payback Time for the Recent U.S. Scuttling of Chinese Takeovers?

China's antitrust regulator is scrutinizing the attempt by Diodes Inc. – an American manufacturer and supplier of discrete, logic, analog and mixed-signal semiconductors – to acquire the Taiwan-based Lite-On Semiconductor Corp. along with its Shanghai-based affiliate, On-Bright Electronics Inc. According to Bloomberg, the scrutiny was necessitated by fears in China that the $428 million deal would deliver the Chinese affiliate of Lite-On into American hands and compromise national interests.

As a reference, Diodes Inc. has a market capitalization of $2.33 Billion and a trailing twelve-month income of $138.3 million. On the other hand, On-Bright – the Chinese maker of chipsets for power management that's listed in Taipei – has a market cap of NT$9.88 billion ($324 million).

The Texas-based Diodes Inc. had launched its bid in August for Lite-On Semiconductor which, as per regulatory filings, holds almost a third of the Chinese Bright-On firm. The deal was expected to conclude by April 2020. Moreover, a Lite-On Semiconductor representative informed Bloomberg that Diode had filed for an antitrust review by Chinese authorities in mid-September.

This development marks the growing suspicion that American M&A activities presently garner in China. The State Administration for Market Regulation in China seems to be receptive to the cautionary note emanating from multiple industry organizations regarding this acquisition. Consequently, the regulator may call for the exclusion of the Chinese affiliate from this deal.

Diodes Incorporated and Lite-On.

Related: How China Plans to Lead the Computer Chip Industry

Original Submission