China's Tsinghua Discloses Investment in Marvell Technology
May 13 2016 - 4:40PM
Dow Jones News
China's Tsinghua Holdings Co. has disclosed an unspecified
investment in Marvell Technology Group Ltd., a Silicon Valley chip
maker that recently replaced its leadership team in the wake of an
accounting investigation and other problems.
Tsinghua Holdings reported the investment in a terse filing with
the Federal Trade Commission, which is required under antitrust
laws for transactions beyond a certain size. The FTC's threshold
for reporting proposed mergers and acquisitions subject to
antitrust enforcement is $78.2 million.
Companies that acquire a stake of more than 5% in publicly
traded U.S. companies are required to file a disclosure with the
Securities and Exchange Commission. Tsinghua Holdings has not done
so; its representatives could not be reached.
A spokesman for Marvell said it did not know the size of the
Tsinghua Holdings investment. "As far as we are concerned, they are
a shareholder for investment purposes," he said, declining
additional comment.
The FTC filing is the latest sign of interest in the U.S.
semiconductor industry by investors in China, where government
officials have been prodding companies to build a domestic industry
to reduce a reliance on foreign-made chips.
Tsinghua Holdings, a Chinese state-owned company affiliated with
Tsinghua University, has been among the most active investors. One
of the company's affiliates, Tsinghua Unigroup Ltd., according to
people familiar with the matter, last summer considered a $23
billion deal to buy Micron Technology Inc. but decided not to
proceed amid signs that the deal would be blocked by U.S.
regulators.
In February, a Tsinghua Unigroup unit backed out of a $3.78
billion deal to purchase 15% of disk drive maker Western Digital
Corp., citing a decision by an intergovernmental group called the
Committee on Foreign Investment in the U.S., or called CFIUS, to
investigate the transaction on national security grounds.
In April, Tsinghua Unigroup disclosed a 6% stake in Lattice
Semiconductor Corp. that it said it acquired in open-market stock
transactions for investment purposes only. It has increased that
stake to 8.65%, according to a May 6 filing with the Securities and
Exchange Commission.
Lawyers who have worked with CFIUS say it typically does not
review transactions that do not result in an investor gaining a
board seat or otherwise take a controlling position in a target
company. Lattice representatives have declined to comment.
Marvell, based in Santa Clara, Calif., is a 20-year-old company
known for chips used in disk drives and networking. In early April,
the company's board fired Chief Executive Sehat Sutardja and
President Weili Dai, the husband-and-wife team that founded the
company.
Timothy Arcuri, an analyst with Cowen & Co., has predicted
that a management change would pave the way for a sale of some or
all Marvell. He expressed doubts in an interview on Friday that
U.S. regulators would approve the Chinese purchase of all of
Marvell, but a partial sale might be allowed.
"This thing is absolutely ripe for China to come in," he
said.
The firing of Marvell's longtime leaders, who remain directors,
followed an accounting investigation by a board audit committee
that identified "tone at the top" problems, including significant
management pressure on sales and finance personnel to meet revenue
targets.
Marvell later named a slate of new directors backed by activist
investor Starboard Value LP, which took a 6.7% stake in Marvell.
Richard Hill, an industry veteran who is former chief executive of
Novellus Systems Inc., was named chairman. The company has launched
a search for a permanent chief executive.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
May 13, 2016 16:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Marvell Technology (NASDAQ:MRVL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Marvell Technology (NASDAQ:MRVL)
Historical Stock Chart
From Apr 2023 to Apr 2024
