CFIUS Summarizes Actions

CFIUS Summarizes Actions

February 01, 2014

CFIUS reported to Congress in December that 19.3% of the 114 proposed acquisitions of US companies that were submitted for review in 2012 were later withdrawn.

About half were later resubmitted with revised terms.

CFIUS — short for the Committee on Foreign Investment in the United States — is an inter-agency committee of 16 federal agencies, headed by the Treasury Department, that reviews potential foreign investments in US companies for national security concerns. Submission of proposed deals is voluntary. However, the committee has authority to set aside transactions after the fact that were not submitted for review.

Review takes 30 days. Transactions that raise potential issues then move into an investigation phase that takes another 45 days.

The report lists as potential areas of concern investments in US companies or projects that “involve various aspects of energy production, including extraction, generation, transmission, and distribution” and projects that are near US military bases or other sensitive US government facilities.

The committee makes recommendations. The President has ultimate authority to block a transaction.

One transaction was blocked in 2012. President Obama ordered Chinese-backed Ralls Corp. to divest four wind farms that the company bought in Oregon at which it hoped to deploy turbines made by its affiliate, the Sany Electric Co. One of the wind farms is close to a US Navy base that provides training for drone aircraft. The company lost a suit in federal court to have the order set aside on grounds that it is an unconstitutional taking of private property without due process. The case is now before an appeals court. (For earlier coverage, see the December 2013 NewsWire starting at page 33.)

CFIUS reports annually to Congress. Its latest report, covering the period through December 2012, discloses that the committee reviewed 538 proposed transactions in the five years from 2008 through 2012. A little over a third of filings moved to investigations. In 2012, the figure was 39%. Of the 2012 filings, 12 were proposed acquisitions in the utility sector.

The largest number of filings in 2012 were for in-bound US investments from China. The top 10 countries for which filings were made in 2012 and the numbers are China (23), United Kingdom (17), Canada (13), Japan (9), France (8), The Netherlands (6), Switzerland (5), Germany (4), India (4) and Israel (4). However, most of the utilities sector filings were from Canada and China.

by Keith Martin