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CFIUS Review of Foreign Direct Investment

The President of the United States is authorized to review and, when appropriate, to block acquisitions of and mergers with US companies by foreign interests for national security reasons. The law, which is administered by the interagency Committee on Foreign Investment in the United States (CFIUS), also authorizes the President to undo completed mergers and acquisitions retroactively, as well as apply conditions to the approval of an acquisition. Although used sparingly until recently, since 2007 national security reviews have become a serious consideration for any proposed merger or acquisition involving a foreign company.

Representation of clients in these matters requires close interaction with the Executive Branch, members of Congress, and, at times, the media. Shearman & Sterling’s Washington, DC-based team focuses on this process and the type of Washington-centered work it involves. We have a long and successful history representing clients on these matters, including both buyers and target companies.

Representative matters include the following:

  • Politically sensitive acquisition of a US defense-related provider by a European company, including cross-cutting legal issues relating to Special Security Agreements under the US National Industrial Security Program (NISP) and export control issues under International Traffic in Arms Regulations (ITAR)
  • Acquisition by a private equity fund of US power generation facilities
  • Acquisition of a large software consulting and distribution division of high-profile US company
  • Acquisition of a high-profile US software developer, including issues relating to Special Security Agreements under NISP and export control issues
  • Acquisition of a US producer of secure wireless networks, including legal issues under ITAR, Export Administration Regulations (EAR) and NISP
  • Acquisition of a U.S. solar energy company
  • Acquisition of a homeland security equipment maker, including export control issues under EAR
  • Acquisition of a US aerospace company, including export control issues under ITAR and EAR
  • Major foreign investment in a US space tourism company
  • Acquisition of a major US manufacturer by the largest non-oil company in the Middle East
  • Investment by a foreign company in a US corporate jet service
  • Acquisition of a US manufacturer of telecommunications equipment by a European company
  • Merger of two European companies, one of which had US subsidiaries that manufacture parts used in military equipment
  • Acquisition of a US aerospace company by a European company
  • Acquisition of a US steel manufacturer by a European company
  • Major investment in a US nuclear fuel and services company by a national uranium company
  • Acquisition of a US uranium mining company by a Canadian mining company
  • Acquisition of US mining interests by a multinational company
  • Acquisition of US power-generation facilities by a foreign buyer
  • Acquisition of a homeland security company by a large European defense supplier
  • Investments in a number of US banks and financial companies by investors from Asia and the Middle East
  • Merger of two European companies, one of which had US subsidiaries that manufacture aviation equipment. Obtained a second Exon-Florio approval when the merged company later engaged in another merger
  • Acquisition of a US chemicals company by a joint venture between a European company and a Middle Eastern company
  • Acquisition of a US manufacturer of firearms by European companies
  • Acquisition by a European company of another European company, which had US subsidiaries that manufactured naval equipment
  • Acquisition of a U.S. construction company with US Government contracts by a European company. When that acquisition was not completed (notwithstanding the Exon-Florio approval), obtained a second Exon-Florio approval for acquisition of the target by another European company
  • Acquisition of a US manufacturer of automotive parts, including parts for military vehicles, by a European private equity fund
  • Acquisition of a European chemicals company with US operations, including US security clearances for military research, by another European chemicals company
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