As countries continue to impose trade restrictions against Russia and Belarus, companies should expect longer review times and increased scrutiny on foreign direct investment involving either of those two nations, law firms said. Deal-makers in the EU should specifically prepare for more red tape resulting from a recent “sweeping” guidance from the European Commission, Fried Frank said in a May 2 alert, which could also speed up the rollout of further mandatory FDI screening regimes across Europe.
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The Biden administration should “employ all tools necessary” to stop Chinese-owned Nexperia’s acquisition of Newport Wafer Fab (NWF), a U.K.-based chip facility, the Republican-led China Task Force said in a letter to the White House released April 21. If the acquisition is completed, the U.S. should remove the U.K. from the Committee on Foreign Investment in the U.S. white list and impose strict export controls on shipments to NWF, the House members said.
Swiss renewable energy company Viston United Swiss will submit a filing to the Committee on Foreign Investment in the U.S. regarding its planned acquisition of California-based Petroteq Energy, an oil production and technology company, Petroteq said in an April 18 SEC filing. The two companies first submitted a declaration to CFIUS in February, but after the committee said it was “unable” to clear the transaction, the companies “pre-filed” a notice with CFIUS April 6, Petroteq said. The companies hope to submit a formal notice “on an expedited basis” in the hopes of beginning CFIUS' 45-day notice review period "as soon as practicable.”
Mimecast, a U.S. information technology security company, received approval from the Committee on Foreign Investment in the U.S. to be acquired by U.K.-based Magnesium Bidco, Mimecast said in an April 1 filing. The company was told March 31 that CFIUS had “no unresolved national security concerns” with the transaction. The companies had submitted a notification to CFIUS in February (see 2202180020).
The U.S. should redouble efforts to control emerging and foundational technologies, establish a new outbound investment screening regime and create a new multilateral export control forum with close allies, said Emily Kilcrease, an economic statecraft expert with the Center for a New American Security. A new multilateral regime could be challenging to stand up, Kilcrease said, but is “imperative” to prevent proliferation of sensitive technologies to adversaries, including China and Russia.
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Paul Rosen, President Joe Biden's nominee to head the Treasury Department’s foreign investment screening efforts (see 2203090015), said he will continue to prioritize U.S. reviews of China-related transactions and wants to better encourage companies to submit voluntary filings. If confirmed, Rosen also said, he will focus on helping allies bolster their own investment screening regimes.
Companies are increasingly choosing to voluntarily file with the Committee on Foreign Investment in the U.S. to avoid being caught up in CFIUS’s non-notified transaction process, CFIUS lawyers and experts said. That trend, combined with faster CFIUS clearances, could mean an increase in CFIUS filings this year, they said.
President Joe Biden this week nominated Paul Rosen, a white collar lawyer with Crowell & Moring, to lead the Treasury Department's work on the Committee on Foreign Investment in the U.S. as the agency's assistant secretary for investment security. Rosen was previously a federal prosecutor and an official at the Department of Homeland Security, where part of his job included advising the White House on CFIUS matters. He is currently a partner in Crowell's White Collar & Regulatory Enforcement, Privacy & Cybersecurity and Government Contracts groups and co-chair of the firm's National Security practice.