As US President Donald Trump and Chinese President Xi Jinping (習近平) met for the first time, Trump’s administration is reviewing attempts by China to buy sensitive US companies, and in one case is actively trying to thwart a deal.
Trump’s administration is scrambling to make sure Westinghouse Electric Co’s nuclear business does not fall into Chinese hands. It also has national security concerns about several other deals in the pipeline that involve Chinese investors.
Bids for Lattice Semiconductor Corp and money-transfer company MoneyGram International Inc are potentially problematic because they could give China access to sensitive US technology and financial infrastructure.
The US, which is reviewing both deals, can block foreign acquisitions of US companies on national security grounds.
However, the most pressing review is of a deal for Stillwater Mining Co, which operates mines in Montana.
Stillwater is the sole US source of platinum and palladium, materials that have strategic importance and military applications. Its proposed acquirer, Sibanye Gold Ltd, is a South African gold miner whose biggest shareholder is a consortium with ties to Beijing.
At least one analyst this week said that those three deals were not as thorny as a possible sale of Westinghouse, and that he was cautiously optimistic that they would win approval.
Height Securities analyst Nils Tracy said that the Sibanye deal had the fewest complications, because palladium has a “low military priority.”
Stillwater sells most of its output to a European refiner, which in turn sells to various companies, including US manufacturers.
However, some lawyers who work on foreign acquisitions are less sanguine about the prospects for those deals.
The multi-agency panel reviewing them — the Committee on Foreign Investment in the US (CFIUS) — has a backlog of takeovers to review and is adrift as senior posts at key member agencies have yet to be filled by Trump.
Backlogs mean that many of the reviews will not be completed on schedule. The panel’s deadline for the Stillwater takeover is on Friday, and might have to be extended. Even if the panel is not inclined to recommend blocking deals, repeated delays could upend them.
“The process is continuing as expected and we hope to have some feedback by the end of next week,” Sibanye spokesman James Wellsted said by telephone. “We’re fairly confident it will be positive.”
US Secretary of Commerce Wilbur Ross said the administration has been looking carefully at the status of Westinghouse, which filed for bankruptcy last week, although the company was not discussed with Chinese officials during Xi’s visit, he said.
US Secretary of the Treasury Steven Mnuchin said any sale to a Chinese buyer would be reviewed by CFIUS.
One person familiar with CFIUS deliberations said that the staff has been looking more closely at the ownership structures of potential Chinese buyers to ensure they fully understand the often complex entities that are involved.
The direction of CFIUS in the Trump administration is not yet clear.
The panel is led by the US Department of the Treasury. Day-to-day operations are handled by deputy assistant secretary for investment security Aimen Mir, a career Treasury official.
Two senior positions at the Treasury that are involved in CFIUS reviews have yet to be permanently filled.
Mir is overseeing a record number of deals. This year, the panel is on track to review about 250 transactions, up from about 170 last year, according to people familiar with the figures, which have not been made public.
Among the takeovers awaiting approval is for Lattice Semiconductor, which has agreed to be sold to Canyon Bridge Capital Partners, a firm backed by Chinese investors.
Lattice said in a securities filing last month that the deal was resubmitted to CFIUS after the 75-day review period expired without a decision and added that the firms remain “fully committed” to the deal and were “actively engaged” with CFIUS.
MoneyGram is working to complete its sale to Ant Financial Services Group (螞蟻金服), which was spun off from the Chinese online retailing giant Alibaba Group Holding Ltd (阿里巴巴).
Rival Euronet Worldwide Inc last month offered a higher price for MoneyGram and wrote to Mnuchin to say the Ant Financial deal raises “significant” national security risks.
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