Intel’s acquisition of Tower Semiconductor has reached the deadline, whether the transaction will continue is doubtful

In March 2021, Intel’s CEO, Pat Gelsinger, announced the “IDM 2.0” strategy, of which the establishment of a world-class Intel Foundry Service (IFS) is a crucial component. To this end, in mid-February of the preceding year, Intel acquired the Israeli semiconductor manufacturer, Tower Semiconductor, for a cash offer of $53 per share, totaling approximately $5.4 billion, aiming to swiftly expand production capacity and foundry range.

As reported by TomsHardware, the transaction has received approval from all regulatory agencies except the State Administration for Market Regulation (SAMR). This has resulted in an almost 19-month delay since February 2022, with the deal still uncompleted. It remains uncertain whether Intel and Tower Semiconductor will further extend the transaction timeline or nullify the agreement.

Initially, Intel intended to conclude the deal within 12 months, which would have been by mid-February 2023. However, due to the postponement of approval by the SAMR, the deadline was first extended to mid-June and then further delayed to August 15th. Given the current state of affairs, it seems unlikely to meet this final deadline. Amidst these circumstances, Pat Gelsinger has made multiple trips to China, attempting to persuade regulatory bodies to endorse the transaction. Yet, considering the broader context of Sino-US semiconductor relations, securing support for this deal seems challenging.

Theoretically, as long as Intel and Tower Semiconductor are willing, they can continually extend the transaction deadline. However, in practice, several factors hinder the indefinite postponement of a deal. For instance, regulatory jurisdictions may mandate a specific timeframe for mergers or acquisitions to be finalized. Extending the timeframe might lead to additional scrutiny or necessitate resubmitting proposals to regulatory agencies.

With only one day remaining for Intel to complete the acquisition of Tower Semiconductor, they might opt to further prolong the transaction or outrightly abandon the purchase.