China’s Tsinghua Unigroup Announces Bid to Purchase U.S. Microchip Manufacturer, Micron; Will Likely Face CFIUS Resistance

On July 14, 2015, Tsinghua Unigroup, a Chinese state-owned enterprise, announced that it was preparing a $23 billion bid to buy U.S. microchip manufacturer, Micron Technology.  The bid would have Tsinghua Unigroup paying $21 per share to Micron shareholders, which is a 19.3% premium over its closing price on Monday.  If this deal is completed it would be the largest foreign acquisition by a Chinese firm to date.

There are some major potential roadblocks to this bid, however, including a likely review by the Committee on Foreign Investments in the United States (CFIUS).  CFIUS has a mandate to review these types of acquisitions from a security and strategic perspective.  This deal will be highly scrutinized and will likely be stymied in the review process.  Micron produces chips that are seen as strategic, due to their use in next-generation data centers.  With China‘s history of hacking incidents, including the most recent incident involving the theft of data on some 21.5 million federal employees, the U.S. government is unlikely to look favorably on this proposed purchase.