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China Most Scrutinised Country under Key U.S. Investment Panel

According to the Committee on Foreign Investment in the United States (CFIUS)’s Annual Report to Congress for 2014, released February 2016, Chinese bids for American assets were reviewed by CFIUS 24 times in 2014. Of 2014’s 147 international deals filed with CFIUS, 16% were with Chinese acquirers, while another 4%, or 6 additional deals, were from Hong Kong.

Hua Capital Management and China Resources Microelectronics recently made a joint US$2.4 billion (C$3.3 billion) bid for Fairchild Semiconductor Inc., only for Fairchild to reject it due to US regulatory concerns, while the bid for ownership of the Chicago Stock Exchange by the Chonqing Casin Enterprise Group this February led to calls by 46 U.S. legislators for a CFIUS review. Technology firm Western Digital Corp.’s plan to sell a 15% stake to Tsinghua Unisplendour Corp. ended on February 23 after the deal came under regulatory review, while in January CFIUS pressure led to the end of Philips’ plan to sell an 80% stake of a division to Chinese buyers for US$3 billion. Review concerns also led to the end of China Resources’ US$23 billion offer for Micron last summer.

A US$6 billion bid by Tianjin Tianhai Investment for Ingram Micro and a US$43 billion deal for Swiss-owned Syngenta, which generates a quarter of its global revenues from North America, by ChemChina are also likely to face CFIUS reviews. Canadian investments were reviewed in 15 cases, while British investments were reviewed in 21 cases. CFIUS reviews transactions relating to the acquiring of American firms by foreign investors, made up of officials from 14 State Departments, and has investigated 627 proposed transactions between 2009 and 2014. During the 2014 review process, 12 notices of mergers or investments were withdrawn, with applicants ultimately abandoning 11 of them.

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