MagnaChip (MX) Falls After Being Told to Pause Merger Amid CFIUS Review
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MagnaChip (NYSE: MX) fell 6.8% in pre-open trading after it received an order from the Department of Treasury on behalf of CFIUS related to its proposed merger with Wise Road Capital
The company disclosed:
On June 15, 2021, outside legal counsel of each of the Company and Parent received a letter attaching an “Order Establishing Interim Mitigation Measures” (the “Interim Order”) from the U.S. Department of Treasury on behalf of CFIUS. The Interim Order imposes the following interim measures, effective as of June 15, 2021, on the Company and Parent: (i) neither of the Company or Parent shall take any action, directly or indirectly, to close, consummate, complete, or effectuate the purpose of the Merger, including: (a) the transfer, lease, license, or sale of any asset or subsidiary of the Company to Parent or any affiliate thereof, (b) the merger of Parent or any affiliate thereof with or into the Company or any affiliate thereof, or (c) the acquisition of any equity or other ownership interest in the Company or any affiliate thereof by Parent or any subsidiary thereof; (ii) Parent shall not take, and shall ensure that none of its subsidiaries take, any security interest in the Company or any affiliate thereof; and (iii) the Company shall not take any action to: (a) change its state of incorporation from Delaware to any other jurisdiction or (b) delist from, or modify the existing listing of the Company on, the New York Stock Exchange. The Interim Order is to remain in effect until (1) CFIUS concludes action under Section 721 of the Defense Production Act of 1950, as amended (“Section 721”) with respect to the Merger, (2) the President takes action or declines to take action under Section 721 with respect to the Merger or (3) CFIUS or the President revokes or terminates the Interim Order.
The Company is assessing the impact of the Interim Order and the special meeting of stockholders scheduled for 8:00 p.m. Eastern Time on June 17, 2021 is expected to be postponed.
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