Japanese semiconductor manufacturer Renesas Electronics announced the cancellation of the proposed acquisition of French semiconductor company Sequans Communications and the termination of the implementation of the TOB (public trading of shares) for Sequans. Sequans shares plunged nearly 65% on February 23, closing at $0.90, a record low since listing in April 2011.

X-FAN1503 Renesas Electronics recently announced that it is canceling its proposed acquisition of Sequans and discontinuing TOB on Sequans, primarily because the acquisition of Sequans will incur tax liabilities that were not previously anticipated.

Under the terms of the MOU, either party may terminate the MOU if, among other reasons, Renesas receives confirmation from the Tokyo Regional Tax Bureau that the completion of the reorganization set out in the MOU will require Renesas to recognize taxable gains and pay such taxes under Japanese tax law (the “Japanese Tax Adverse Ruling”). On February 15, 2024, Renesas received an adverse Japanese tax ruling. Accordingly, Renesas gave it the right to terminate the Memorandum X-FAN1503 of Understanding, and as a result of such termination, the Tender Offer was also terminated.

X-FAN1503

X-FAN1503 In August 2023, Renesas announced that it had entered into a basic Letter of Agreement with Sequans to acquire all of the outstanding ordinary shares of Sequans on a TOB basis at a price of $0.7575 per ordinary share and $3.03 per American Depositary Share (one ADS is equivalent to four ordinary shares). Renesas has implemented the above TOB since September 2023. Renesas had been expected to acquire Sequans for $249 million (about 17.92 yuan).

Renesas noted that with the suspension of the TOB, the Sequans common shares and ADSs previously participating in the sale will be returned immediately.

Renesas said the termination of the contract would not have a material impact X-FAN1503 on its core strategy of pushing its technology into high-growth industries. Renesas Electronics continues to see significant opportunities in cellular iot technology and intends to build on this momentum through its partnership with Sequans.

Founded in 2003, Sequans designs and develops chips and modules for Internet of Things (IoT) devices. Sequans offers a wide range of 5G/4G cellular iot products, including 5G NR, Cat 4, Cat 1, and LTE-M/NB-IoT, providing reliable iot wireless connectivity without the need for a gateway.