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UPDATE 1-CVC gauges interest from Chinese suitors for components maker Linxens -sources
November 23, 2017 / 3:31 PM / 24 days ago

UPDATE 1-CVC gauges interest from Chinese suitors for components maker Linxens -sources

(Adds Linxens declines to comment)

By Kane Wu

HONG KONG, Nov 23 (Reuters) - Buyout group CVC is gauging the interest from prospective Chinese suitors for Linxens, the French smart-card components maker that it bought two years ago for 1.5 billion euros ($1.8 billion), people close to the matter said.

Linxens management recently made presentations to interested parties in China to test their appetite, they said. An adviser is helping the company reach out to the prospective China suitors but there is no formal mandate or sale process at the moment, according to the people.

The French company, which manufactures components that make credit cards, ID cards or health cards machine-readable, could be valued at 2.5 billion euros in an eventual sale, one of them said.

“Linxens is constantly approached by local (Chinese) state-backed investors offering joint ventures and other partnerships to access Linxens’ technology,” another person familiar with the company said, adding that so far it had turned everyone down for fear of giving away its technology.

CVC and Linxens declined to comment. The people could not be named as the information was confidential.

SECURITY CONCERNS

Linxens is tapping Chinese interest at a time when China’s pursuit of advanced chip and semiconductor assets has suffered pushback from U.S. regulators on national security concerns.

President Donald Trump barred China-backed buyout fund Canyon Bridge from acquiring U.S. chip maker Lattice Semiconductor in September and the Committee on Foreign Investment in the United States (CFIUS) last year blocked Fujian Grand Chip’s planned takeover of German chip equipment maker Aixtron.

In the wake of those incidents, European assets have become increasingly attractive for Chinese investors, who, despite recent tightening, view Europe’s regulatory environment as more lenient, one of the people said.

Earlier this month, Canyon Bridge received a London court’s approval for its 550 million pound ($732 million)takeover of British chip designer Imagination Technologies.

Linxens, which does not have a U.S. presence, according to its website, makes so called connectors that are crucial for the communication between a smart card and an electronic reader. It also makes antennas and inlays for applications such as contactless payment, transport and access.

If CVC decided to go ahead with an auction of Linxens, the buyout group is expected to also market Linxens to peers such as Hon Hai Precision Instruments and Amphenol Corp , people familiar with the industry said.

The company, headquartered close to Paris, has 535 million euros in annual sales and employs 3,500 staff at 9 production sites around the world. It also has offices in China, Singapore and Thailand. ($1 = 0.8449 euros) ($1 = 0.7518 pounds) (Reporting by Kane Wu in Hong Kong; Additional reporting by Arno Schuetze and Sophie Sassard; Editing by Muralikumar Anantharaman and Keith Weir)

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