UK: Newport Wafer Fab, the largest domestic semiconductor manufacturer in the UK, was acquired by Nexperia, a Dutch semiconductor manufacturer, more than a year ago. Nexperia had previously agreed to buy the remaining stake for £63 million (US$75 million).
With more than 14,000 employees worldwide, Nexperia has expanded financially troubled Newport and 500 of its employees to complement its existing manufacturing facilities in Germany and the United Kingdom, and to meet "the growing global demand for semiconductors". Announced acquisitions as an important component of the plans. However, Nexperia's journey to complete the transaction has become less simple and more difficult, due to its eventual owner: Wingtech Technology, which is based in Jiaxing, a city in Zhejiang province and listed on the Shanghai Stock Exchange. ,
The Newport acquisition is one of several high-profile deals that are currently in limbo as a result of a law passed earlier this year that gave the British government the authority to block foreign takeovers, including those in the past to end such deals. capacity is also included. Committee on Foreign Investment in the United States (CFIUS). According to Glenn Hall, a fellow at Nelson Rose Fulbright in London, "under this new regime, it is anticipated that the government will be more likely to intervene in transactions." According to Hall, "the majority of transactions reviewed under the new arrangement are estimated to be clear without requiring remediation." “However, the new arrangement is far-reaching, with serious repercussions for non-compliance, and requires the parties to the transaction to engage with a potential national security review in a broader range of situations than the previous Enterprise Act regime. " After years of discussion on how to improve the UK's approach to national security reviews of foreign investment by matching similar steps taken by the EU, Japan and the United States, the 2021 National Security and Investment Act (NSIA) 4 came into force in January. ,
The law gave the British authorities greater authority to review a wide range of transactions, including minority investments, the acquisition of voting rights and the acquisition of property, including intellectual property. It also changed the national security provisions of the Enterprise Act. Important transactions must be reported to the government for review by acquaintances in 17 sensitive economic sectors, including advanced robotics, artificial intelligence and data infrastructure. Failure to do so can result in legal action, civil fines and cancellation of the transaction for up to five years. According to a government report from June, the British government received 222 notifications in the first three months of this year, of which 17 were called for further review. Earlier, the government had predicted that it might get 1,000 to 1,830 notifications a year.
According to Michelle Davies, a partner in the global antitrust and foreign investment team at Fresh fields Brooches Derringer, "the new arrangement adds an additional level of friction to global deal making, as the increasing number of transactions [including some internal restructuring] would require the UK government approval before completion." According to Davis, more than 100 countries now have "some sort of investment law," so it's not the only one to do so. Britain's defense and security think tank Royal United Securities Institute (RUSI) warned earlier this year that the law could raise barriers to doing business in the UK, making it a "less attractive - or at least simpler - investment". place to do". According to Alex Carlyle, a distinguished fellow at RUSI and a member of the House of Lords, "the law should provide safeguards against potentially malicious investors" (May). However, some businesses will incur additional costs as a result of the Act's requirements at a time when they are already dealing with high inflation and tighter financial restrictions.
The Newport deal is one of several deals involving Chinese and Australian buyers that have been blocked by Trade Secretary Quasi Quarteng using his new authorization. It is also reviewing other deals involving Chinese and Hong Kong companies.In a license agreement with Beijing Infinite Vision Technology, a maker of 3D rendering technology used in architectural design, multimedia displays and animation, Quarteng barred the University of Manchester from sharing camera technology in July. He prevented Bristol-based Pulsic Ltd from being bought by Hong Kong-based Super Orange HK Holding this week. Pulsik has created electronic design software that can be used to create "state-of-the-art integrated circuits" that can be used for both civilian and military purposes. The £4.2bn purchase of a 60% stake in National Grid's natural gas transmission business, by a Macquarie-led consortium of Australia, is the largest infrastructure deal.
Tour investors in the world have also been the subject of a separate national security review by the office of Quarteng.As energy prices rose sharply in the wake of Russia's invasion of Ukraine in February, causing a cost-of-living crisis in Britain, this year British lawmakers have drawn significant attention to energy security.Nearly ten years after politicians of the time referred to the "golden age" of cooperation and investment between Beijing and London, the review of the Newport transaction comes at a time of growing mistrust of China in Britain and deteriorating Sino-British relations.
A group of cross-party backbenchers have urged the government to take a firm stand on issues ranging from alleged human rights abuses in the Xinjiang Uygur Autonomous Region to Beijing's commitments to Hong Kong. Parliament is also considering several government bills this year to target the influence of foreign powers in politics and education. The ongoing race between Foreign Secretary Liz Truss and former Treasury chief Rishi Sunak to succeed Boris Johnson as prime minister also focused on China. Next month is expected to see the conclusion of the Conservative Party leadership election, and the new prime minister will be announced on 5 September when parliament reconvenes after the summer break. According to the most recent polls, Truss is currently the favorite to win the leadership race, but no finalists are expected to significantly change Britain's foreign policy towards China.
The lawyers claimed that the NSIA review process is "agnostic" when it comes to specific countries such as China. However, buyers in fragile industries should think about the consequences of the review, particularly if "the buyer may take the risk in the eyes of the UK government," according to Freshfields partner Davis. Increased scrutiny of international trade deals in Britain comes as several countries, including the US and 27 EU member states, have tightened their scrutiny of foreign investment, especially late amid a trade war waged by Chinese companies in sensitive areas. From the US led by President Donald Trump and the recent technology dispute with the US.
The CFIUS has long been used by the US to limit the transfer of dual-use technology or to obstruct deals in sensitive industries, but the changing geopolitical environment and rising trade and technological tensions with China have led to a change in the regime. Expanded and deal done. Trade with China in the US and elsewhere in the world has come under close scrutiny.
Concerns about national security forced US officials to sell their stake two years ago to the Chinese owners of gay dating app Grindr and American hotel software company StayTouch. The European Commission and EU member states came to an agreement in June, allowing the European Commission to halt transactions or fines for foreign-backed takeovers with annual revenues of at least €500 million (US$509 million) and the government in the EU. given more power. Contracts worth at least €250 million. The discussion focused heavily on China's development. According to a trade association, the Confederation of British Industry (CBI), British businesses are actively rethinking their supply chains in China and elsewhere to "protect distribution and enhance resilience" amid geopolitical tensions and ongoing logistics problems. " for.
CBI International Director Andy Burwell said, "It is only natural to assess how those existing links are performing and seek greater diversification where necessary in a globalized economy and to become deeply involved in the global supply chain with China."According to the Department for International Trade, China accounted for about 7% of all trade between Britain and its trading partners in the year ended March 31. According to government figures, China represented £93 billion in total trade with Britain last year, almost double what it was ten years ago.
Refinitiv, a division of the London Stock Exchange Group, claims that the deteriorating relationship between Beijing and London also affects Chinese deals. According to Refinitiv, Chinese investment in the UK declined more than four times to US$402.6 million from January to July compared to the same period last year. According to Refinitiv, transactions began to slow down after Chinese investment in the UK reached US$3.3 billion in 2021. Due to the coronavirus pandemic, transactions fell to US$125 million in 2020. Nexperia, which has repeatedly insisted it is a Dutch-run company, is disappointed by the growing mistrust of Chinese-linked investments and delays in closing the Newport transaction. Nexperia has been forced to deny rumors that it will close the Newport facility and move its technology to China. We have no plans to stop any operations. We have been in Hamburg for over 50 years, and we are in the UK Stockport location for over 50 years. We made significant investments in Newport and Manchester,
according to Nexperia UK Country Manager Tony Versluij, who testified before a parliamentary committee in July. Jobs were produced by us. We intend to remain. Since 2021, Nexperia, a Dutch company based in Nijmegen, has invested more than £160 million in the UK. This intervened as Newport, which had been facing financial difficulties for several years, was considering filing for bankruptcy. Since 2019, Nexperia has been Newport's second largest shareholder.
Nexperia prevented Newport from going bankrupt, if you consider the facts surrounding it, Versluij said. “We covered those jobs there. By giving the previous owner the option to pursue their plans to do the compound semiconductor business, we also met the needs of the local cluster. Nexperia has requested that the investigation, which was announced in May, be "expedited", claiming that its customers and employees are becoming impatient over the lack of information. With a decision no longer anticipated until mid-September, however, the uncertainty will last longer as a result of the government increasing its review last month. A spokesperson for Nexperia said: “We look forward to a positive resolution of this matter at the earliest, so that we can continue our investments in the UK semiconductor industry and provide certainty to our employees and customers.
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