Sometimes companies do everything they can to do a mutually agreed merger and the government says no. One can easily imagine the CEO has identified companies to merger with, lined up the financing, reach out for a friendly merger, and then went to the government agencies for them to sign off. Many times the process works seamlessly and people do not hear about the process.

In an article from the Associated Press, Intel wanted to buy for $5.4 billion an Israeli chip manufacturer called Tower Semiconductor.

The deal required approval from a number of regulators worldwide, including those in China. The Chinese did not want to sign off. There was plenty of lobbying, for example Intel’s CEO Patrick Gelsinger went to China to win over the Chinese. Intel had hoped to use Tower to expand manufacturing capacity and open up opportunities in the US, Israel, Italy and Japan. In China the regulator was China’s antitrust regulator, the State Administration for Market Regulation.

The problem for Intel was China imposed export controls on 2 metals used in computer chips and solar cells. In the US, the government has tightened controls and imposed restrictions aimed at China’s production of advanced computer chips.

Intel has to pay Tower Semiconductor $353 million as a breakup fee, however Tower CEO Russell Ellwanger said we were excited to join Intel and appreciate the efforts of all parties.

Linking to dividend paying stocks, sometimes companies can do all the right things, but government policies get in the way. When policies change, the merger could go through but until then it is a lost opportunity. On a friendly merger, there is always the prospect of a next time when things do not go right.

There are more questions than answers, till the next time – to raising questions.