Tsinghua-Micron: A Fake $23B Deal to Test U.S. Regulators?
Micron Technology Inc. may be an attractive acquisition target but it should not be on the acquisition menu of China’s Tsinghua Unigroup Ltd. as reported earlier this week by many news outlets.
In fact, considering the likely regulatory opposition to the deal, it shouldn’t even be seriously considered by a Chinese company. This transaction doesn’t sound credible and it will most likely not happen because shareholders willing to sell their stakes will find the road blocked by not just regulators in the U.S. but also in Europe and Japan.
Aside from normal regulatory approvals, Tsinghua must also obtain U.S. Congressional clearance, which is unlikely to happen without the imposition of major concessions that will make Micron a less attractive target for the China-based buyer. So why exactly is Tsinghua reportedly planning to make this offer – if the report is true – and why did the company pick Micron instead of a transaction involving any of a dozen or more smaller U.S. semiconductor suppliers that regulators might be more inclined to approve?
The likely explanation is that China wants to testtest is test the limits of U.S. opposition to its enterprises’ ownership of key American technology companies. Even if an offer for Micron falls through, a review of the deal will force the U.S. government to fully disclose justifications for the rejection. Those reasons would have to be credible, be internationally acceptable and be based on better reasoning than the often purely politically-motivated objections Congressional representatives have raised about similar deals in the past.
China obviously has good reasons for seeking an end to what it must consider knee-jerk “No” responses to offers by its biggest enterprises to purchase Western companies, especially those in the technology sector. Most Western governments not only forbid the transfer of so-called dual-use technologies to China but also block certain acquisitions and have laws banning Chinese enterprises from bidding for major public work contracts.