Intel (INTC) -) shares moved lower Wednesday after the chipmaker scrapped plans to buy Israel-based Tower Semiconductor, citing difficulty in obtaining approval from regulators.
Intel, which first unveiled plans to buy the specialty foundry group for $53 per share, or $5.4 billion in February of last year, will pay a break-up fee of $353 million to terminate the deal. Neither group indicated which approval process caused the deal to collapse, although Reuters reported late Tuesday that regulators in China had yet to sign-off on the transaction.
Intel, perhaps sensing the approval process would fail, has been investing heavily in new production facilities elsewhere, including Germany and Poland, as it looks to take advantage of European Union subsidies amid the region's broader push to lessen its reliance on China supply chains. Intel also finalized plans to build a $25 billion factory in Israel on June 19.
“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy,” said CEO Pat Gelsinger. “We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs."
Intel shares were marked 1.3% lower in early Wednesday trading to change hands at $34.35 each. Tower Semiconductor's U.S.-listed shares were marked 9.% lower on the Nasdaq at $30.60 each.
- Receive full access to real-time market analysis along with stock, commodities, and options trading recommendations. Sign up for Real Money Pro now.
