Steps to making it safely through a CFIUS review

On 23 February, Unisplendour Corporation announced its decision to terminate the acquisition of Western Digital, a US storage giant, due to concerns regarding the review process of the Committee on Foreign Investment in the United States (CFIUS). Last July, Tsinghua Unigroup had offered US$23 billion to acquire Micron Technology, a US chipmaker, but the proposal was also put off due to CFIUS concerns.

Other Chinese M&A initiatives that have recently failed as a result of CFIUS reviews include Fairchild Semiconductor’s rejection of China Resources’ acquisition offer and Philip’s termination of the sale of its lighting business to GSR Ventures. CFIUS reviews are now considered one of the main legal hurdles for Chinese enterprises contemplating investment in the US.

As an inter-agency US government authority, the CFIUS is responsible for reviewing the national security implications of foreign investment in the US. Headed by the Department of the Treasury, other members of the CFIUS include the departments of justice, homeland security, commerce, defence, state, and energy. According to the 2014 annual report recently published by the CFIUS, 627 foreign investment projects were submitted for CFIUS review between 2009 and 2014, covering a wide variety of industries including computer technologies, electronics, publications, technology services, infrastructure, mining and transportation.