According to the Nikkei Asian Review, Applied Materials' acquisition of Kokusai Electric from investment company KKR for US$3.5 billion failed to obtain approval from Chinese regulators. As the deadline for the transaction is approaching, this jeopardizes the transaction.

Applied stated that the purchase agreement may have been terminated on March 19, 2021 in accordance with its terms after the parties failed to confirm timely approval of the Chinese regulatory authorities.

The press release stated: “If Applied does not receive confirmation of timely approval before the deadline for payment of the termination fee on March 26, 2021, Applied will treat the agreement as terminated and pay KKR a cash termination fee of US$154 million.”

Tokyo-based Kokusai, formerly part of the Hitachi Group, is known for manufacturing equipment for thin film deposition, which is a process of adding thin layers of thin films on silicon wafers to form circuits.

Mainland China is the only government left to approve the transaction. After Ireland and Israel approved in 2019, Applied previously received approval from Taiwan, China in the second quarter of fiscal year 2020, and Japan and South Korea received approval before that.

However, this is not the first time that Applied Materials failed to acquire a Japanese counterpart. As early as 2013, when the company acquired Tokyo Electron, it was rejected by the US authorities due to market monopoly concerns.