December 18, 2009
State Interference With Capitalism II: The Government Actually Rejects a Foreign Acquisition
Posted by David Zaring

I've blogged before about the rarity of action from the government's national security committee, which in my view - and you will have to stay tuned for the soon to be published article on this - rarely acts against foreign acquirers, but does serve as a congressional notification service.  Congress is much more likely to swing into action for certain foreign acquisitions, and one place where it does so, oddly enough, is natural resources.  The Obama administration has just told a Chinese company that it will not let it take over a small Nevada gold company, which is curious, to say the least, because such an acquisition would hardly let the Chinese corner the market in gold.  As the Times notes, however, "The Nevada mines are also close to military installations, including the Fallon Naval Air Station, complicating the deal, according to written summaries of meetings with Obama administration officials obtained by The New York Times."  There's also been a further investigation of a sale of Virgin Galactic to a Middle Eastern government owned concern, but I'm guessing that the acquisition will be permitted there.

Winners: DC lawyers, who have all the more reason to remind companies that they need to hire experts to take them through the opaque CFIUS process.  And DoD, which is much more worried about foreign acquisitions than the other members of that committee, which supervises foreign acquisitions.

Loser: China, which is really the only country that has ever suffered reversals before CFIUS.

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