The Committee on Foreign Investment in the United States
(CFIUS), the federal government's interagency committee charged
with reviewing foreign investments in US businesses for potential
effects on national security, recently released its Annual Report
to Congress. The report covers CFIUS activity during calendar year
an increase in the number of CFIUS filings during calendar year
2010 as compared with 2009, largely reflecting increased activity
in the mergers and acquisitions market; the number of filings,
however, remained below 60% of pre-recession 2008 levels;
no transactions were suspended or blocked in 2010, though some
filing parties withdrew their notices during either the review or
the investigation stage;
the percentage of filings that proceeded past the review stage
to the investigations stage remained steady at 38%, a level
significantly higher than in years prior to the strengthening of
the CFIUS process in the 2007 Foreign Investment and National
Security Act; and
a continuing increase in the number of transactions in which
the Committee has required acquiring parties to agree to ongoing
measures designed to mitigate national security concerns, such as
restrictions with respect to government contracting, notification
obligations relating to changes in product or services, and
establishment of a Corporate Security Committee to ensure
The report also reveals a few trends about the industries that
have constituted a large share of the transactions reviewed by
CFIUS. Transactions in the Manufacturing sector and the Finance,
Information, and Services sector composed a larger percentage of
the total number of CFIUS-reviewed transactions than in 2009. There
were relatively fewer covered transactions in the Mining,
Utilities, and Construction sector than in 2009, but these
transactions constituted the same percentage of the total number of
transactions as they did in 2008. Over the last three years
combined, relatively large numbers of the CFIUS-reviewed
transactions involved US technology businesses, such as computers
and computer products manufacturing (62 covered transactions) and
computer systems design and related services (23), but other
industrial subsectors were popular as well. There were 28 covered
transactions during the three-year period involving US utilities,
and 22 involving US electric power generation, transmission, and
The Committee also analyzes which countries are home to the
foreign parties involved in covered transactions. As it did in 2008
and 2009, the United Kingdom led other countries as home to foreign
acquirers of US businesses. Other countries with a large number of
companies involved in covered transactions in the 2008-2010 period
included Canada, France, and Israel—each with more than
20 CFIUS-reviewed transactions. Japan, China, Australia, and the
Russian Federation all had more than 10 CFIUS-reviewed
transactions. The Committee also reported that there were no clear
indications that any one country's investors had attempted to
target particular US industries for investment in 2010.
WilmerHale attorneys represent clients at every stage of the CFIUS
process, including providing pre-filing advice, transaction
structuring, preparing and submitting filings to the Committee, and
in complying with post-filing requirements such as mitigation
measures. Some representative recent engagements include:
representation of NYSE Euronext, operator of the New York Stock
Exchange and other entities, with respect to its merger with
Deutsche Börse AG;
representation of Teledyne Technologies in the sale of Teledyne
Continental Motors, a manufacturer of aviation engines, to Aviation
Industry Corporation of China International (AVIC
representation of Chesapeake Energy Corporation, the second
largest US producer of natural gas, in sale of its assets in the
Fayetteville Shale area to BHP Billiton Petroleum (North America1)
representation of a California developer of mass spectrometry
technologies in its acquisition by a US-based company majority
owned by a French parent; and
representation of a subsidiary of Smiths Group plc, of the
United Kingdom, in its acquisition of Power Holdings, Inc., a
producer and distributor of electrical power distribution,
monitoring, and switching equipment.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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