The Committee on Foreign Investment in the United States (“CFIUS”) reviews cross-border investments or acquisitions that could result in control of a U.S. business by a foreign person and that would implicate U.S. national security. Section 721 of the Defense Production Act of 1950 authorizes the President to investigate such transactions and to suspend or prohibit any such deal where the President determines it would impair U.S. national security and no other adequate means are available to address the threat. The only statutory method to foreclose such a Presidential order is to file a prior notice of the transaction with CFIUS and to obtain a clearance letter. In September 2012, President Obama prohibited the acquisition and ownership of four U.S. wind farms in Oregon by Ralls Corporation, a U.S. firm ultimately owned by Chinese individuals and a Chinese wind turbine company, and ordered that the U.S. firm divest its interests in the Oregon wind farms. In recent weeks, media have reported that Smithfield Foods is to be purchased by Shuanghui, China’s largest pork producer, and that those parties have filed a prior notice of their transaction with CFIUS.
Foreign buyers or investors and their U.S. counter-parties should conduct necessary legal due diligence to determine if a potential investment or acquisition should be notified to CFIUS. This program will highlight those types of transactions that are seen by CFIUS to raise U.S. national security concerns and will provide an overview of the laws and regulations underlying the CFIUS notice review and investigation process. The program will also review “best practice” strategies in CFIUS notices, the relevant process timelines, recent high-profile CFIUS cases and the “lessons learned” from those cases.
For additional information on this event, please contact Lori Wosmek.