January 18, 2018 / 3:26 AM / 4 months ago

U.S. clears Chinese acquisition in rare move

(Reuters) - Beijing-based Naura Microelectronics Equipment Co Ltd has completed a deal to buy U.S. semiconductor manufacturing equipment company Akrion Systems LLC, in a rare instance of the U.S. government approving such an acquisition, attorneys for Naura said on Wednesday.

The deal, worth just $15 million, is small by dealmaking standards, yet it comes as the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security risks, has made it more difficult for Chinese companies to buy U.S. assets.

CFIUS’ stance has toughened as U.S. President Donald Trump seeks to put pressure on China to help tackle North Korea’s nuclear ambitions and be more accommodative on trade and foreign exchange issues. Unfilled political vacancies at several government departments and agencies have also made it more difficult for CFIUS to approve deals.

“As far as we are aware, this is the first Chinese acquisition of a U.S. company to be approved by CFIUS under the Trump administration,” said Gibson Dunn & Crutcher LLP partner Fang Xue, one of the deal lawyers representing Naura.

CFIUS has been traditionally wary of semiconductor deals with Chinese entities, because it is concerned about the transfer of potentially sensitive technology.

Canyon Bridge Capital Partners LLC, a U.S.-based private equity firm funded by the Chinese government, saw its $1.3 billion acquisition of U.S. chip maker Lattice Semiconductor Corp collapse last year after it was blocked by CFIUS, a rejection subsequently upheld by the White House.

But Akrion, based in Allentown, Pennsylvania, is a supplier of equipment to manufacturers of semiconductors and technology companies. It provides machinery that prepares the chips for use.

CFIUS’ approval of the Akrion deal bodes well for Xcerra Corp, a U.S. semiconductor testing company whose deal to be acquired for $580 million by Unic Capital Management, a subsidiary of China’s Sino IC Capital and the Hubei Xinyan Equity Investment Partnership, is also under CFIUS review. Like Akrion, Xcerra does not manufacture any chips itself.

The most high-profile Chinese acquisition of a U.S. company to be shot down by CFIUS since Trump’s inauguration a year ago was Ant Financial’s acquisition of U.S. money transfer company MoneyGram International Inc, which was terminated earlier this month.

Xue said the Akrion deal was approved by CFIUS during the standard 75-day review period, even as other deals have had to refile their applications to secure extensions.

Akrion faces financial difficulties because it lacked scale, and the deal with Naura will boost its ability to compete, Xue added.

Naura, a semiconductor manufacturing equipment company, is a subsidiary of Naura Technology Group Co, a Chinese state-backed company.

Reporting by Greg Roumeliotis in Washington; Additional reporting by Liana B. Baker in New York; Editing by Peter Cooney

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