Chinese Group to Buy U.S. Chip Firm Xcerra for $580 Million

(Beijing) — Chip-testing equipment maker Xcerra Corp. said it has agreed to be acquired by a Chinese group for $580 million, becoming the latest company targeted under a Beijing campaign to build up the nation’s semiconductor sector.

An affiliate of Sino IC Capital and Unic Capital Management has offered to pay $10.25 in cash for each of Xcerra’s U.S.-listed shares, representing a 16% premium to the company’s average share price over the last 30 days, Xcerra said in a statement on Monday. The company’s shares rose 7% to $9.63 after the announcement came out.

Xcerra said its management will remain intact after the deal closes, and it expects no changes to its day-to-day business.

The company operates in a highly competitive chip sector, and last year reported a loss from its continuing operations before returning to a profit in its latest quarterly results through the end of January.

“With the financial backing of such a prominent and respected private equity fund, Xcerra will be well-positioned for future growth, both in new and existing markets,” Xcerra CEO Dave Tacelli said. “We believe this partnership will enable the company to make long-term investments in innovation and product development as well as broaden and strengthen our customer relationships around the world.”

Xcerra added that the deal includes a “go shop” period, during which it is allowed to look for rival bids over the next 35 days.

Sino IC Capital President Jun Lu said his group will “work closely together with regulators, in an open and transparent manner, as they evaluate the merits of the transaction.” The Chinese group said it is backed by China IC Fund, a state-sponsored fund with strong support from Beijing, which aims to provide money for investment in the semiconductor sector.

Despite being the world’s largest consumer of microchips that power products as diverse as smartphones and microwave ovens, China still has to import most of those due to lack of development of its own sector. Beijing has been trying to change that by making large sums of money available for companies to purchase foreign technology, and for building new manufacturing facilities at home.

But that drive has met with a wave of skepticism from Western and Asian governments, wary of selling some of their most cutting-edge companies to China. Such skepticism and political push-back has killed a number of deals, including plans by Chinese groups to buy U.S. chipmaker Micron Technology Inc. and Germany’s Aixtron SE.

Contact reporter Yang Ge (geyang@caixin.com)