Daily Journal Interviews Manatt Division Chair on Increase of China-U.S. M&A Deals
"Lawyers Help China-U.S. Deals Navigate Oversight"
Daily Journal
June 24, 2013—The Daily Journal interviewed Manatt's Gordon Bava, chair of the firm's Business, Finance and Tax Division, for insight into the increase of China-U.S. deals and how these foreign investors should approach acquisitions of U.S. assets.
The Daily Journal reports that in recent years, the Committee on Foreign Investment in the United States (CFIUS), a group housed within the Treasury Department, has played an increasingly prominent role in assessing the national security implications of cross-border transactions, particularly in deals involving acquisitions of U.S. assets by the Chinese. CFIUS filings are submitted voluntarily, but the committee can independently elect to review and act on deals, even after they've been completed, if suspicions are raised that a foreign acquisition may pose a risk to national security. The committee is chaired by the U.S. Treasury secretary and is comprised of representatives from the U.S. Departments of Justice, Defense and Homeland Security, among other agencies.
Industry experts are expecting a steady increase in the number of acquisitions by Chinese companies, thereby increasing the number of CFIUS filings.
Earlier this month, Manatt M&A data service Mergermarket published a report demonstrating that Chinese companies purchased U.S. assets and companies collectively worth more than $11 billion in 2012. The report suggests that "business leaders in both the U.S. and China believe that government regulation and intervention . . . present the most significant obstacles to sustained and robust M&A and investment activity."
Bava told the Daily Journal that he thinks a CFIUS filing should really be understood as an overtly political extension of U.S. foreign policy considerations, considering the personnel that make up the committee.
"I can appreciate foreign buyers feeling as though it's an unfair process and one that is difficult to maneuver through and around," he said. "I would think the better approach would be to anticipate it as a political campaign as much as a legal process . . . Nothing happens in Washington without a political aspect to it."