WASHINGTON: The Pentagon is taking a harder look at proposed foreign acquisitions of US companies given the increasing financial complexity of such deals, but continues to encourage foreign investment, a top US defence official said this week.
“If you have a deal that is in the interest of the US economy and does not impinge on national security, we will approve it,” said Brett Lambert, the Pentagon’s representative on an interagency committee that reviews foreign takeovers.
Lambert, who retired yesterday after four years as the deputy assistant secretary of defence for manufacturing and industrial policy, bristled at the suggestion that the Committee on Foreign Investment in the United States (CFIUS) was making it difficult for foreign investors to acquire US companies.
“It’s completely the opposite,” Lambert said in an interview.
He said foreign interest in US companies remained high, given the continued importance of the US defence market despite recent budget cuts, and said he expected the number of foreign transactions reviewed by CFIUS to double in coming years from more than 100 last year.
“You have foreign capital that wants to come in, which we want, which we encourage. The question is how do we allow that foreign capital to come in while protecting national security,” Lambert said.
He acknowledged that the Defence Department and other agencies involved in the CFIUS review process were often taking longer to review transactions but said that was largely because of the increasing complexity of the transactions.
Lambert said high-profile cases that were rejected tended to generate headlines but the majority of cases were approved, including some with conditions.
He declined to discuss specific CFIUS cases under review, including a $4.7bn bid by a Chinese company to take over Virginia-based pork producer Smithfield Foods Inc.
The most recent CFIUS report to Congress showed that the committee reviewed 111 transactions in 2011, of which 40 were investigated under a longer 45-day review. Six of the notices were withdrawn. Data for 2012 has not been released.
US lawmakers have raised concerns about various takeover bids by Chinese firms in recent years, but CFIUS approved plans by China’s largest auto parts maker in January to buy car battery maker A123 Systems Inc.
In February, CFIUS approved the $15.1bn purchase of Canadian oil firm Nexen Inc by China’s state-owned CNOOC Ltd, although it imposed conditions limiting its operation of wells in the Gulf of Mexico.
CFIUS rejected a bid by another Chinese-owned company, Ralls Corp, to build wind farms near a US military site in Oregon, but the company has challenged that decision in court.
Lambert said the Nexen case showed US authorities were willing to work with companies seeking to invest in the United States as long as they showed a willingness to compromise. “We can come to accommodations. We will work with the companies but they have to respect our national security concerns.”
Lambert said foreign companies seeking to invest in the United States should hire lawyers who had already shepherded other deals through the process.
Reuters
