Beyond Broadcom: U.S. Scrutiny Frustrates Other Foreign Deals
By Austen Hufford
Several planned purchases and investments into U.S. companies from Chinese counterparts have been derailed recently after facing U.S. government review.
The Committee on Foreign Investment in the U.S., an interagency group known as CFIUS, grabbed headlines earlier this week when it temporarily blocked Singapore-based Broadcom Ltd.'s proposed $117 billion takeover of Qualcomm Inc.
CFIUS has also questioned a growing list of other deals in recent months, as the Trump administration seeks to stem technology transfer and maintain the U.S.'s economic and military edge over China and other rival countries.
Here are some deals frustrated by CFIUS.
-- UQM Technologies Inc., a Colorado company developing motors for electric cars, said Monday that China National Heavy Duty Truck Group Co. pulled a planned second investment into the firm, citing CFIUS concerns. The deal reached in August would have allowed the Chinese truck company, which has a 9.9% stake worth $5.1 million in UQM, to increase its ownership stake to 34%. The two companies said they plan to re-submit an application for CFIUS to review.
-- Beijing Dabeinong Technology Group Co. last week canceled a plan to buy Waldo Genetics, a Nebraska-based seller of breeding pigs, after it said it failed to gain U.S. government approval. The company had struck a deal in March 2017 to buy Waldo for $16.5 million. Privately held Waldo didn't immediately respond to a request for comment.
-- Xcerra Corp., a Norwood, Mass., provider of testing equipment for semiconductors and electronics, last month terminated its sale to a Chinese group, citing difficulty in securing CFIUS approval for the $580 million deal.
--CFIUS declined to approve a $1.2 billion deal for Chinese billionaire Jack Ma's Ant Financial Services Group to buy MoneyGram International Inc., the companies said in January.
--In September, President Donald Trump blocked an attempt by Chinese government-backed Canyon Bridge Capital Partners to buy Portland, Ore.-based Lattice Semiconductor Corp. after CFIUS recommended the president block the deal.
--Chinese conglomerate HNA Group Co. has been trying for some time to get approval from the panel to buy a controlling stake in SkyBridge Capital, the investment firm owned by former White House adviser Anthony Scaramucci.
--A $2.7 billion deal for China Oceanwide Holdings Group Co. to buy Richmond, Va.-based insurer Genworth Financial Inc. also is awaiting clearance from the committee.
Concerns over Chinese takeovers began mounting under the previous administration as Chinese investment in the U.S. surged. They have continued to intensify during the current administration, culminating recently with the review of Broadcom's bid for Qualcomm.
Some in Congress and government agencies say Chinese investment poses disproportionate risks to national security because it may be directed and subsidized by the government of China, which competes with the U.S. both economically and militarily.
The outlook for Chinese investment could get tougher still if bipartisan bills introduced in November by Senate Majority Whip John Cornyn (R., Texas) and Rep. Robert Pittenger (R., N.C.) pass. The proposed legislation would further ratchet up CFIUS scrutiny of foreign investment and take aim in particular at Chinese technology deals.
CFIUS, which is chaired by the Treasury Department, doesn't usually release its decisions or detail its operations. In a statement, the Treasury Department said it is prohibited by law from publicly disclosing information filed with the committee, saying its reviews focus on national security concerns.
Write to Austen Hufford at firstname.lastname@example.org
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March 06, 2018 18:22 ET (23:22 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.