President Trump Blocks Chinese-Funded Acquisition Of U.S. Semiconductor Company

Author:Ms Tatman Savio, Kevin J. Wolf, Christian C. Davis and Jung Hwa Song
Profession:Akin Gump Strauss Hauer & Feld LLP
 
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Key Points

President Trump issued an order prohibiting the proposed $1.3 billion takeover of Lattice Semiconductor Corporation, a U.S. company, by Canyon Bridge Capital Partners, Inc., a private equity firm funded by Chinese investment, consistent with the recommendation of CFIUS. This order marks the first time that President Trump has formally blocked a transaction on national security grounds under his statutory authority to review foreign investment in the United States and only the fourth time that any president has done so. The President's decision in this case may discourage parties in future transactions from allowing a transaction to proceed to presidential review in the face of an adverse CFIUS recommendation and encourage them to abandon a transaction in similar circumstances rather than force a formal decision by the president. On September 13, President Trump issued an order prohibiting the proposed $1.3 billion acquisition of Lattice Semiconductor Corporation ("Lattice") by Canyon Bridge Capital Partners, Inc. ("Canyon Bridge") (hereinafter, the "Proposed Transaction"), consistent with the recommendation of the Committee on Foreign Investment in the United States (CFIUS or the "Committee"). This decision follows CFIUS's 10-month review of the deal in which it identified national security concerns associated with the Proposed Transaction that it could not resolve through mitigation with the parties. The order stated that the President found credible evidence that Canyon Bridge "might take action that threatens to impair the national security of the United States." This is the first time that President Trump has formally blocked a transaction under the CFIUS statute and only the fourth time that any president has done so.

CFIUS Background

CFIUS is an interagency committee, chaired by the Treasury, with the authority to review certain foreign investments in the United States for national security considerations. Specifically, the Committee has authority to review "covered transactions" that could result in a non-U.S. person's gaining control over a U.S. business. CFIUS review of a transaction is ordinarily initiated by the parties' submission of a joint written notice to the Committee that describes the proposed transaction and responds to information requirements in the CFIUS regulations. Thereafter, the CFIUS review process involves a 30-day review period, followed by a 45-day investigation if CFIUS identifies potential...

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