Tasked with reviewing foreign acquisitions of U.S. companies, the interagency Committee on Foreign Investment in the United States (CFIUS) plays a critical role in protecting U.S. infrastructure. Generally, foreign companies looking to gain a controlling interest in a U.S. asset voluntarily submit to CFIUS review when such transactions may implicate national security concerns. The CFIUS practice at Akin Gump Strauss Hauer & Feld LLP offers extensive experience in advising and representing clients during all stages of possible CFIUS review and in helping companies avoid the possibility of a post-closing CFIUS evaluation and divestiture order.
In its role as the administrator of the Exon-Florio Amendment to the Defense Production Act of 1950, CFIUS may, through its executive authority, suspend or prohibit any foreign acquisition, merger or takeover of a U.S. company that might “threaten or impair” the national security of the United States. CFIUS review, though not required prior to the closing of every foreign purchase, is mandatory in cases where acquisitions are made by a foreign person controlled by a foreign government. In addition, foreign direct investors acquiring assets in certain sensitive U.S. industries—for example, energy and natural resources, aerospace and defense, and technology—face special scrutiny, which often leads to extensive substantive review by CFIUS of these transactions. Such review can result in foreign party concessions that restrict that party’s control over, and/or access to, the intended U.S. entity.
Recent cases that attracted both public and congressional attention due to insufficient CFIUS scrutiny have led to the passage of the Foreign Investment and National Security Act of 2007 (FINSA), which amended the Exon-Florio law by expanding the scope of CFIUS investigations and increasing congressional oversight of the agency. Conversant in these new and existing laws and their application, Akin Gump’s CFIUS lawyers are committed to helping clients avoid such public debacles as those involving the Dubai Ports World (CFIUS-cleared merger with Peninsular and Oriental Steam Navigation Company (P&O), subsequently divested) and the Alcatel-Lucent merger.
Akin Gump favors a direct and proactive approach in dealing with the agency. We first determine whether voluntary submission to CFIUS review is warranted; if a proposed acquisition of a U.S. entity by a foreign company appears to have little to no potential impact on U.S. national security, a client faces minimal risk in opting out of voluntary notice to CFIUS. Increasingly, the question of what can be deemed a “controlling” interest in a U.S. company has come to greater prominence—clients involved in seemingly noncontrolling foreign investments in U.S. entities more and more must be aware of the CFIUS definition of “controlling,” lest their proposed transactions trigger concern in the agency, in Congress or in the media.
Should CFIUS review appear necessary, our team engages key CFIUS members promptly to explain the proposed transaction, provide information about the parties and solicit comments from CFIUS members regarding potential concerns. Such alacrity is essential in cases where transactions are particularly complex or contentious, especially considering the limited time CFIUS has to determine the necessity of a full investigation.
Clients engaged in potentially controversial transactions benefit from the firm’s multifaceted approach, wherein not only members of the trade team but also attorneys in our communications, public law and policy, corporate and other relevant firm practices engage with CFIUS, Congress and executive branch officials and the media to address politically sensitive aspects of a transaction. Through our integrated and coordinated approach, Akin Gump resolves many cases before the need for a CFIUS review arises. Where a review is deemed necessary, our attorneys have represented both buyers and sellers before CFIUS, successfully guiding them through the review process and, in most cases, obtaining a termination of the proceeding by CFIUS following the initial 30-day review.