CFIUS Reviews are a Reality for More and More Cross-Border Transactions
By Chris Griner and Christopher R. Brewster*
Recent news reports indicate that in-bound foreign investment in the United States is "soaring to new heights" in 2016, with more than 280 cross-border deals by early March, well ahead of the pace in 2014 and 2015.1
Most of these foreign acquisitions will not implicate national security. Nevertheless, cross-border transactions will increasingly fall under the scrutiny of the multi-agency Committee on Foreign Investment in the United States ("CFIUS" or the "Committee"), which is charged with assessing the impact of foreign investment on U.S. national security. Following CFIUS review, the President can block a transaction that the President finds a threat to U.S. national security. CFIUS reports 147 filings for FY2014, continuing a generally upward trend since the financial crisis of 2007-2009.2
Although none of these transactions was blocked by the President (only two have been blocked in history), twelve were withdrawn after filing. Transactions may be withdrawn for many reasons (one of the twelve was refiled in 2015), but it is fair to say that the majority of these transactions were likely withdrawn because they either could not pass CFIUS scrutiny, or because the parties refused to accede to the terms that CFIUS would require to clear the deal.