1

Reviews Conducted by the Committee on Foreign Investment in the United

States (CFIUS)

2

Why You Should Care

• Any acquisition of a U.S. business by a foreign person may be subject to CFIUS review

• Transactions are now frequently scrutinized both legally and politically

• Failure to consider could lead to significant adverse consequences (e.g., divestment, political fallout)

• Prudence calls for incorporating CFIUS considerations as part of standard due diligence

3

Basic Purpose of the Statute

The President may suspend or prohibit any merger, acquisition, or takeover by or with any foreign person which could result in foreign control of any person engaged in interstate commerce in the United States when:

– There is credible evidence that leads the President to believe that the foreign interest exercising control might take action that threatens to impair the national security; and

– No other provision of law other than the International Emergency Economic Powers Act provides adequate and appropriate authority for the President to protect the national security.

4

CFIUS Process

Pre-Filing Filing / Review

WithdrawInvestigation

POTUS

30 days

45 days

15 days

Report to Congress

(DNI Analysis)

Decision

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Illustrative Transactions (Post 9/11)

• Global Crossing/STT

• Dubai Ports World / P&O

• CNOOC / Unocal

• IBM / Lenovo

• Alcatel / Lucent

• Carlyle / Dubai Aerospace

• Arcapita / Cypress Communications

• Photon Dynamics/Orbotech

• DRS / Finmeccanica

• Bain / Huawei / 3Com

• Temasek / Merrill Lynch

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0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 Nov.2007

Notifications

Investigations

CFIUS Notifications / Investigations

?

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Possible Outcomes

• No objection raised

• Transaction terminated

• Transaction amended

• Mitigation agreement

• Blocking the acquisition

• Divestment

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Best Practices

• Treat this as a political as well as a legal process.

• Cooperation and good faith generally will be rewarded.

• Develop the political / public relations message early in the process.

• Meet with the relevant government actors in advance of filing.

• Ensure adequate compliance program post-transaction.

• Close the loop with Congress.