Takeaways

While there is increasing scrutiny, transactions continue to be reviewed and cleared by CFIUS, even where a Chinese entity is involved.
Upcoming legislative changes will expand the definition of a “covered transaction” subject to CFIUS review and alter the review process.
It is essential that both the buyer and seller contemplate CFIUS early on in the diligence stages of a proposed deal, and when engaged with CFIUS, provide complete, accurate, and comprehensive information in order to resolve a national security concern.

Many US-China deals are still getting done, but there is no question the challenges facing those deals has increased over recent months. Relatively few transactions have emerged from the CFIUS process since earlier this year; some have cleared and some have not. Our review of publicly available information indicates that the clearance rate for US-China deals since the Trump Administration took office has fallen from about 55% earlier this year to about 50%, but two very high-profile deals received approval (an acquisition by COSCO which involved a pier in Long Beach Harbor, and China Oceanwide’s acquisition of Genworth Financial). We continue to believe that careful selection of target assets, early risk assessment, and transparent filings with CFIUS will still allow many if not most deals to get through.

Read more Fall 2018 CFIUS Briefing

(To read the complete white paper on this topic click here.)