Overseas M&A assets face forced sale as the "FTDI case" reaches a critical juncture

The control dispute over Anshi Semiconductor has not yet been settled, and another case involving a Chinese acquisition of a UK chip company is beginning to attract more attention.

February 7th is the deadline set by the UK government for the mandatory sale requirement under the national security review of the FTDI acquisition. This overseas Chinese M&A transaction, completed in 2021, is now being forced into a countdown for forced sale.

Tracing back to November 2024, the UK government officially notified the Chinese consortium that they must transfer all shares of the UK USB bridge chip company Future Technology Devices International Limited (FTDI) within the specified timeframe. The UK cited the 2022-effective National Security and Investment Act (NSIA), citing “potential threats to national security” as the reason.

An industry insider told Yicai that the Chinese consortium has been striving for more time. The latest extension request is still awaiting a response from the UK side. Based on past experience, there is still a certain probability that the extension will be approved.

The current ruling not only affects this single project but has also caused substantial changes in the future overseas M&A decisions of Chinese companies. The insider said, “Chinese enterprises have to reassess the uncontrollable risks in overseas mergers and acquisitions caused by current geopolitical instability.”

Industry estimates suggest that if there is no easing or loosening in the future, Chinese consortia may face losses.

How could FTDI be forcibly sold?

FTDI was established in March 1992, registered in Glasgow, UK. It is an important manufacturer in the global USB bridge chip design field, with products used in industrial control, communication equipment, automotive electronics, and consumer electronics. It holds nearly 20% of the global market share in the USB bridge chip segment.

An industry chip expert told reporters, “The company’s high market share, stable sales, and continuous dividends were very important to the Chinese consortium at the time.”

In early 2021, the Chinese consortium acquired about 80.2% of FTDI through Feite Holdings Limited, established in Dongguan (referred to as Dongguan Feite), and set up a wholly-owned subsidiary in the UK, FTDI Holding Limited. The transaction was financed with approximately $364 million of domestic funds and $50 million in overseas bank acquisition loans, totaling about $414 million. The remaining 19.8% of FTDI shares are held by the founder’s company, Stoneyford Investments Limited.

Dongguan Feite is jointly owned by five funds: Jian Guang Guanglian, Jian Guang Guangli, Jian Guang Guangquan, Jian Guang Guangke, and Jian Guang Guangpeng, holding approximately 21.12%, 32.57%, 20.53%, 15.97%, and 9.76%, respectively. Through this structure, listed companies such as Dalian Technology and Huapengfei indirectly hold interests in FTDI.

This project was a public bidding transaction, involving both overseas industry players and multiple Chinese listed companies. Nearly ten participants competed, and the Chinese consortium ultimately won.

After the transaction, FTDI Holding Limited appointed directors to FTDI. From 2022 to 2023, FTDI’s profits grew, with cumulative net profits exceeding $100 million.

In January 2022, the UK’s National Security and Investment Act officially came into effect. In November 2023, the UK government formally launched a national security review of the FTDI deal, and a year later, ruled that the transaction posed a national security risk, requiring the Chinese consortium to divest all shares.

Insiders close to the deal told reporters, “The transaction was completed many years ago, and demanding a forced divestment would itself impact business operations and customer confidence. The Chinese consortium has made multiple attempts to communicate with the UK side and submitted various alternative proposals. They applied for extensions and repeatedly discussed rectification and commitments with the UK, hoping to retain their holdings under compliance, but ultimately none were accepted.”

In February 2025, the UK High Court rejected the Chinese consortium’s request for temporary relief, upholding the forced sale decision, meaning FTDI must comply with the UK government’s previous order for the Chinese side to sell their shares.

Asset disposal game under multiple pressures

With the final ruling by the UK government, related pressures quickly transmitted to Chinese consortia and their affiliated companies.

Chinese listed companies Dalian Technology (300679.SZ) and Huapengfei (300350.SZ) recently issued announcements disclosing significant potential financial impacts from the investment.

On the evening of January 26, Dalian Technology announced its 2025 performance forecast, indicating that its investment in Dongguan Feite Semiconductor Holdings Co., Ltd., holding about 21.17% of the shares, may face asset impairment or investment loss due to the UK government’s requirement to sell its 80.2% stake in FTDI. The announcement showed that, due to a large discrepancy between the latest bid and the book value of the investment, this disposal is expected to cause a significant negative impact on the company’s net profit, estimated to exceed RMB 200 million. The company also stated that the final outcome and specific impact of this share disposal remain uncertain.

Subsequently, on January 29, Huapengfei announced that its 9.76% stake in Dongguan Feite faces similar investment risks. The announcement indicated that, affected by the UK government’s forced sale order, the company’s investment might incur fair value loss, estimated to exceed RMB 19 million. Huapengfei stated that the final profit and loss recognition will depend on the data confirmed by the auditing agency, and there is still some uncertainty.

According to reporters, regarding the UK government’s final divestment order and the latest developments, the Chinese consortium is still seeking more time to dispose of assets to minimize losses.

Insiders close to the deal told reporters that over the past period, the Chinese consortium has sought dozens of potential buyers, including industry players and financial investors. However, once labeled as a “national security risk,” the transaction difficulty has significantly increased. The UK’s final deadline for completion is February 7, 2026. If the transaction is not completed by then, stricter regulatory consequences may follow. The consortium has applied for multiple extensions from the UK side and is still awaiting the latest response. If they do not respond actively, they risk being forcibly taken over, further increasing the risk.

But the deal has not yet been finalized.

In recent years, Western countries have frequently scrutinized Chinese M&A under the pretext of national or economic security, with cases like Anshi Semiconductor’s investment restrictions in the UK and the Netherlands.

The Chinese Ministry of Foreign Affairs spokesperson has repeatedly stated at routine press conferences that China opposes the broadening of the “national security” concept and discriminatory practices targeting specific foreign companies. They called on relevant countries to genuinely abide by market principles and avoid politicizing trade and economic issues.

The signals from the FTDI case are forcing Chinese companies to reassess risk structures in overseas M&A. “Even if the assets are excellent, if geopolitical environments change, the significant efforts invested initially could be wiped out,” said the industry insider. “In future international mergers and acquisitions, geopolitical uncertainty will be prioritized. While M&A integration still exists globally, the difficulty for Chinese participants has clearly increased.”