(Reuters) - Microchip Technology Inc MCHP.O on Tuesday received antitrust clearance from China to buy rival Microsemi Corp MSCC.O, marking the first approval of a major technology deal by the country since the Broadcom-Brocade deal in August.
The go-ahead to the $8.35 billion acquisition comes in less than three months after the companies struck the deal, indicating that trade tensions between the United States and China were easing.
“It’s clear that the US-China relations are in thaw-mode,” Elazar Advisors analyst Chaim Siegel said.
“Between now and Trump’s meeting with North Korea in June, the U.S. has increased negotiating leverage, which has moved US-China relations forward.”
The approval from China's Ministry of Commerce (Mofcom) comes days after U.S. President Donald Trump decided to revisit penalties for Chinese company ZTE Corp 000063.SZ for flouting U.S. sanctions on trade with Iran.
It also comes ahead of a meeting later this week on trade issues between senior Chinese and U.S. officials in Washington.
Microchip, which makes analog chips for carmakers and industrials, on Tuesday also received antitrust clearances from the Japan Fair Trade Commission, the Philippine Competition Commission, the Austrian Federal Competition Authority and the German Federal Cartel Office.
“I didn’t expect any block. I think there was some political concern that the deal would not close due to the tension that Trump has with China,” analyst Kinngai Chan of Summit Insights Group said, adding that he doesn’t expect many hurdles in the Qualcomm-NXP deal as well.
Shares of NXP rose 1.4 percent at $112.30.
Shares of Microsemi, the largest U.S. commercial supplier of military and aerospace semiconductor equipment, rose 1.3 percent to trade closer to the offer price of $68.78. Microchip shares were marginally down in early trading.
The deal, which has already received antitrust approval in the United States, is expected to close in late May or early June and will strengthen Microchip’s base in the computing and communications sectors.
Reporting by Arjun Panchadar in Bengaluru; Editing by Arun Koyyur
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