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January 4, 1987

US AGENCIES SPLIT ON WHETHER TO ALLOW FUJITSU TO TAKE CONTROL OF FAIRCHILD

By CBR Staff Writer

The Reagan administration has extended the mandatory 30-day period for review of the proposal by Schlumberger Ltd to sell 80% of Fairchild Semiconductor to Fujitsu Ltd – but despite the increasingly protectionist stance in the US, the message is getting through that if Fujitsu is not allowed to take the company over, Fairchild may simply be closed altogether. According to the Wall Street Journal, while the Pentagon is opposed to the deal on the grounds that Fairchild does some 40% of its business with military contractors, both the Treasury and the State Department are in favour – but the acquisition could be turned down on anti-trust grounds, since the combination would create the fifth largest chip company in the world. The anti-trust issue is the only one on which the merger can be rejected under US federal law, but restrictive measures available to the Pentagon and the Commerce Department could make the acquisition unviable for Fujitsu. The Pentagon fears that the merged company will back off from developing and manufacturing the specialist military chips that its contractors need, but Fujitsu has already agreed to maintain that side of the business, and to institute controls to safeguard any classified information.

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