The Carlyle Group joined with LX to bid on Magnachip, a South Korean company listed on the NYSE. Magnachip was on track last year to be sold to Wise Road Capital, a Chinese private equity underwriter (PEU). The U.S. Treasury challenged the deal in an expansive move.
The parties in the Magnachip deal did not voluntary file a notice with CFIUS. Rather, after the deal was publicly announced, CFIUS’s non-notified team identified the transaction and requested that the parties file a notice. As noted in Magnachip’s May 26 Filing, approximately two months after the public announcement of the deal, the CFIUS Staff Chairperson emailed the companies to request that they file a notice regarding the merger and undergo formal CFIUS review.
Wise Road and Magnachip withdrew their application, shelving the deal and opening the door for a U.S. PEU to come knocking. The Carlyle Group has All American cred with its Pennsylvania Avenue address and patriotic philanthropist co-founder David Rubenstein. President Joe Biden spent most of his Thanksgivings over the last decade at Mr. Rubenstein's Nantucket estate.
The Carlyle Group used its political connections to sell Landmark Aviation/Standard Aero to Dubai Aerospace during a time the public and members of Congress threw a fit over selling six port operations to Dubai Ports World. There was barely a news peep about that deal.
Magnachip loser Wise Road Capital has executives from Harvard, KKR and McKinsey. The Chinese PEU declares it a global private equity firm with investors from high tech, financial firms and family offices. I would venture they are as greedy as their Western counterparts.
Politicians Red and Blue love PEU and increasingly, more are one. A Magnachip buy should be smooth sailing for Carlyle.
