* Proposal of $29 per share
* Likely to face regulatory scrutiny if accepted
* Co says evaluating proposal
* Shares touch near 3-yr high of $28.34
(Adds analysts and expert comments, background; updates shares)
By Abhirup Roy and Anna Yukhananov
Aug 14 U.S. digital imaging chipmaker OmniVision
Technologies Inc said it received a buyout proposal
from a group of Chinese investors, including a state-owned firm.
The proposed buyout values OmniVision at about $1.7 billion,
but would almost certainly face scrutiny from the Committee on
Foreign Investment in the United States (CFIUS) if the Santa
Clara, California-based company accepts it.
Attempts by Chinese firms to buy U.S. technology companies
in the past have faced immense scrutiny, especially due to
cybersecurity concerns and fears of transfer of technology that
could be used for military purposes.
"I think any Chinese investment in the U.S. is going to be
looked at carefully," said Tim Keeler, a partner at law firm
Mayer Brown LLP.
OmniVision makes chips for smartphone and tablet cameras,
including Apple Inc's iPhones.
CFIUS, an interagency group chaired by the Treasury
Secretary, reviews deals that could bring U.S. businesses under
foreign ownership and is required by law to assess any
transaction involving a state-owned firm.
The Chinese investment group, led by Hua Capital Management
Ltd, includes state-owned Shanghai Pudong Science and Technology
Investment Co Ltd.
Jim Lewis, a technology expert at Washington-based
think-tank Center for Strategic and International Studies, said
the deal was likely to face greater scrutiny because China has
been looking to buy chip-making technology.
Chinese state-owned investment firms have offered to buy
several U.S.-listed chipmakers in the past year, such as Montage
Technology Group, Spreadtrum Communications Inc
and RDA Microelectronics Inc.
"You have these political hurdles, of people being concerned
about state-owned enterprises, and people being concerned about
chip-making technology going to China," Lewis said.
"I can't think of what else they could add to make it more
difficult (to get CFIUS approval)," he added.
However, equity analysts at Robert W. Baird and Oppenheimer
& Co said they did not believe OmniVision had technology that
might raise security concerns.
OmniVision's competitors include Sony Corp, Samsung
Electronics Co and Himax Technologies Inc.
The company has a design center and a testing facility in China
and generates nearly 80 percent of its revenue from the country.
The company is gaining market share against its key
competitors in the Chinese smartphone market, helped by strong
demand for image sensors and the lower cost of its products,
Baird analysts wrote in a note last month.
The proposed offer price of $29 per share represents a
premium of 17.9 percent to the stock's Wednesday close.
OmniVision shares touched a near three-year high of $28.34
on the Nasdaq.
The company said it was evaluating the proposal and that JP
Morgan Securities was its financial adviser.
Up to Wednesday's close, the stock had risen more than 40
percent this year.
(Additional reporting by Soham Chatterjee in Bangalore; Editing
by Kirti Pandey and Simon Jennings)