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CFIUS Annual Report – Review Process Appears Increasingly Stringent

Brian P. Curran

Brian P. Curran,

Washington, D.C.

03 March 2015
The recently published annual report to Congress of the Committee on Foreign Investment in the United States (CFIUS), a U.S. Government interagency committee that conducts national security reviews of foreign acquisitions, suggests that the Committee’s reviews are becoming increasingly stringent.  Sweeping conclusions cannot be drawn from a report that covers only the Committee’s work in 2013, but the report does include some useful insights.  Here are a few of the highlights:

  • Higher percentage of CFIUS cases proceeding to a second-stage investigation - The percentage of cases that CFIUS could not resolve in its initial 30-day review period increased to nearly 50% in 2013 (up from 39% in 2012), meaning that companies – for planning purposes – likely will have to assume CFIUS’s formal review will last 75 days (30 days for the first stage; 45 days for the second stage).
  • More mitigation - The percentage of cases that involved CFIUS imposing conditions to mitigate national security concerns rose from 7% in 2012 to 11% in 2013. The annual report also mentioned one new broad mitigation measure – “Providing the [U.S. Government] with the right to review certain business decisions and object if they raise national security concerns” – that appears similar to the mitigation that CFIUS imposed on SoftBank Corp.’s 2013 acquisition of a controlling interest in Sprint Nextel Corporation.
  • Higher percentage of CFIUS notices withdrawn but not refiled - Seven of the eight CFIUS notices withdrawn in 2013 were not refiled with the Committee. One possible explanation for some of these withdrawn-but-not-refiled cases is that they raised significant national security issues that ultimately scuttled the deals. 2012 saw a spike in the number of CFIUS cases withdrawn – 22 – but more than half of those were refiled.
  • China again tops the list - For the second consecutive year, companies from China submitted more filings to CFIUS than any other country, with nearly a quarter of the filings involving Chinese buyers.

Brian P. Curran

Brian P. Curran,

Washington, D.C.

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