The Tsinghua Unigroup Ltd., a technology conglomerate backed by the China's government, is looking to acquire American chip maker Micron Technology Inc. for $23 billion, a deal that if successful would be biggest acquisition by Chinese company of an American firm.
Citing anonymous sources, Reuters reported that Tsinghua plans to offer $21 per share for Micron, which is almost a fifth higher than the stock's price as of Monday. The news wire said Micron has yet to receive a formal bid.
Micron makes memory chips that can store different types of data across a range of devices. The company's manufacturing technology are more advanced than anything available in China's chip industry, where Tsinghua Unigroup is the market leader.
The report said Tsinghua may be interested in Micron given China's drive to develop its semiconductor, server and networking equipment industries on concerns that foreign governments are able to spy on it through those products.
Reuters, however, noted that given the nature of the deal the United States' Committee on Foreign Investments, which are composed of representatives from various departments of the executive branch, needs to approve of the transaction. The report added that the political hurdles for the acquisition may be too high, and China is better served on investing on its own research for such products.
The Wall Street Journal, which broke the story on Tuesday, reported that the committee may block the deal if its assessment shows a potential security threat the country. It added that previous foreign takeovers attempt have been taken back by potential buyers due to a potentially adverse ruling by the committee.
The Wall Street Journal added that successful takeover by Tsinghua will dwarf the biggest Chinese takeover of a U.S. firm, when meat processor Shuanghui International Holdings Ltd.'s bought Smithfield Foods Inc. in 2013 for $7.1 billion.
Reuters also reported that the deal may also need to be approved by Taiwanese authorities because Micron has manufacturing plants there and has a joint venture with a Taiwanese firm. It noted that Taiwan also reviews takeover attempts by Chinese companies of Taiwanese firms.
