The Shanghai Stock Exchange (SME) on Monday approved a plan by Semiconductor Manufacturing International Corporation (SMIC), the country's leading chipmaker, to acquire the remaining 49 percent stake in its subsidiary SMIC North for 40.6 billion yuan (about 5.98 billion U.S. dollars) through share issuance, marking the largest merger and acquisition deal since the inception of China's STAR Market.
The deal, approved by SME's merger and acquisition review committee, was the first case of a multi-listed red-chip company issuing shares to purchase assets on the STAR market, and it is also the largest merger and acquisition deal in the history of the domestic wafer foundry industry.
After the completion of the transaction, SMIC's stake in SMIC North will increase from 51 percent to 100 percent. The offering price is set at 74.2 yuan (10.9 U.S. dollars) per share.
"Stock acquisition is a mechanism that binds the interests of both parties and shares risks. It sends a very positive message to the outside world and saves cash. Cash is a very valuable asset for growth-oriented companies, which can use it for other places where cash is needed more badly," said Qian Jun, executive dean of the Fanhai International School of Finance (FISF) of Fudan University in Shanghai.
Experts said that the acquisition will help further improve the quality of SMIC's assets and enhance business synergy, as SMIC North is one of the most profitable single factories within the SMIC system.
"Through industry consolidation, higher-quality assets can be concentrated into the hands of listed companies that have operational and value creation capabilities," Qian said.
SMIC gains approval for acquisition of its Beijing fab
The United States, on one hand, strikes Iran's nuclear facilities, and on the other hand, signs a nuclear energy cooperation agreement with Saudi Arabia, a move that exposes Washington's consistent double standards, said an Iranian analyst on Friday.
According to announcements from the U.S. Department of Energy on Wednesday and Saudi Arabia's Ministry of Energy on Thursday, the United States and Saudi Arabia have reached a nuclear energy cooperation agreement. Iranian political analyst Arash Akbari said that both Saudi Arabia and Iran are signatories to the Treaty on the Non-Proliferation of Nuclear Weapons and enjoy the right to peaceful use of nuclear energy.
"At the same time that the U.S. is striking Iranian nuclear facilities in the middle of Iran, and it is threatening the life of living creatures, not only human, at the same time they are dealing with Saudi Arabia and giving them the rights, the same right that Iran is having now, which is being destroyed. This is the best example of double standard," Arash said.
Arash also said that Iran will resolutely respond to the U.S. strikes on its civilian facilities.
"We are on a direct confrontation with U.S. And the U.S. is striking Iranian civilian facilities such as roads, bridges, dams, tunnels. But at the same time, Iran is doing a confrontation on the basis of proportional self-defense. So whatever we are getting hit, we are getting hit back. At this stage, I think we are not at the end of this confrontation," he said.
U.S. President Donald Trump on Thursday attached a new condition to the U.S.-Saudi civilian nuclear agreement signed one day earlier, saying that the deal will move forward only if Saudi Arabia normalizes relations with Israel through the Abraham Accords.
In response, the expert said that the United States intends to use the nuclear energy cooperation agreement with Saudi Arabia to bring Israel closer to regional Arab countries and strengthen Israel's strategic position in the Middle East.
US-Saudi nuclear deal exposes Washington's double standards: Iranian analyst
