In a move that has only taken place four times in 27 years, President Donald Trump blocked a china backed takeover of Lattice Semiconductor Corporation citing security issues. Before this move, there have been only three instances in the past 27 years in which a US president has blocked the foreign takeover of an American company, because of issues related to national security. The move is almost certain to cause panic among other Chinese investors.
Trump's audacious move
Over the years, the current United States President Donald Trump has been quite vocal about his misgivings about China and yesterday he blocked a deal that could have seen an American company falling into the hands of a China backed private equity firm.
On Wednesday, the White House, as well as the Treasury Department, stated that the president blocked the takeover after recommendations from a variety of security agencies. Lattice was to be taken over by a private equity firm named Canyon Bridge Capital Partners LLC, and according to a report by Bloomberg, the company enjoys the backing of China's state owned asset fund.
This move is a continuation of the Trump administration's policy of a hardline stance about Chinese takeovers of American business, and at this point, some other acquisitions are under review. For instance, MoneyGram's sale to Jack Ma's Ant Financial is under consideration as well, and it is understood that this policy will be in place for the foreseeable future.
According to Bloomberg, MoneyGram's stock tanked by as much as 4.4% while Lattice stock nosedived by 1.7% following the announcement.
National security issues
The Treasury Secretary Steven Mnuchin issued a statement in which he explained the rationale behind the move. He said, "Consistent with the administration’s commitment to take all actions necessary to ensure the protection of U.S.
national security; the president issued an order prohibiting the acquisition,".
Following the dramatic announcement, Lattice CEO Darin G. Billerbeck issued a statement in which he said that the deal was in the best interests of everyone, but now that the deal is dead, the company will continue to work on the long term prosperity of the enterprise.
On the other hand, Canyon Bridge Capital Partners LLC issued a statement in which they expressed their disappointment at the breakdown of the deal but also reiterated that they would be exploring other investment opportunities.
