The acquisition of Lattice Semiconductor Corp (NASDAQ:LSCC) by Chinese private-equity fund Canyon Bridge Capital Partners (CBCP) could run into roadblocks as fresh details link CBCP to China’s central government.
As per a Reuters report, CBCP is funded by Chinese government’s top decision-making body called the State Council. Analysts now say links with the China’s central government could jeopardize CBCP’s chances of taking over Lattice.
Lattice is a maker of programmable chips, the same kind produced by Xilinx, Inc. (NASDAQ:XLNX) and Intel Corporation (NASDAQ:INTC)’s Altera. Among other applications, programmable chips are used in military technology. Although the U.S. military doesn’t buy chips from Lattice, analysts say U.S. security regulators may be concerned about China’s military using Lattice technology in the wake of revelations that CBCP is funded by Beijing.
Heightened scrutiny
While CBCP’s links with the Chinese government don’t mean that its takeover of Lattice will automatically fall apart, the deal is likely to draw heightened regulatory scrutiny. The Committee on Foreign Investment in the United States (CFIUS), the U.S. federal agency that conducts security reviews of foreign acquisitions of U.S. companies, would want to know the potential implications of Lattice selling to a fund controlled by Beijing. CFIUS has not cleared the deal and its actions may make or break the transaction.
“It’s not a deal killer, but deals like this sometimes run into roadblocks,” said analyst James Lewis of Center for Strategic and International Studies.
$200 billion in foreign acquisitions
The deal to acquire Lattice continues the string of China’s overseas acquisitions of technology assets in recent years. Overseas acquisitions by Chinese companies have reached a record $200 billion so far this year. But China’s aggressive technology buyout is raising questions about Beijing’s military ambitions.
CBCP is seeking to acquire Lattice for $1.3 billion. The deal was reached earlier this month and U.S. regulators are just beginning to review it. Lattice shares eased 2.2% to close at $7.09 in the last session. The stock is up almost 10% since the beginning of the year.
