This announcement follows a number of similar unsuccessful deals between U.S. and Chinese companies including Ant Financial’s application to acquire MoneyGram.
SUMMARY
The deal made between Chinese conglomerate HNA Group and American company SkyBridge Capital, a hedge fund led by Anthony Scaramucci, a former aide to U.S. President Trump, has fallen through. The Committee on Foreign Investment in the United States (CFIUS), formed to consider foreign acquisitions of American companies that could put the country’s national security at risk, has rejected HNA’s application due to security concerns. This announcement follows a number of similar unsuccessful deals between U.S. and Chinese companies including Ant Financial’s application to acquire MoneyGram, a money transfer company, back in January that was denied also due to national security concerns. Bipartisan legislation, introduced by Senator John Cornyn of Texas, deemed the “Cornyn Bill,” would further strengthen CFIUS and give it the authority to scrutinize joint ventures with foreign firms. Chinese companies have been on a buying spree acquiring companies around the globe, often outbidding competitors by more than double. Furthermore, the rapid purchasing of American assets by Chinese companies is similar to the strategy Beijing has been taking in their One Belt One Road Initiative, an economic project that many experts have accused China of leveraging their economic advantages to gain influence in southeast and central Asia.
FAO GLOBAL ASSESSMENT
The news of HNA’s unsuccessful attempt to purchase SkyBridge in addition to legislation aimed at giving CFIUS more power is likely to further strain the already tense trading relationship between China and the United States. While flush with cash, Chinese firms may find more difficulties in acquiring high-tech or financial institutions due to the current political environment. This is likely to hamper opportunities for US tech companies that have created a technology with intent to share or sell, but will face scrutiny if that new technology is deemed a national security interest.
Related Links
- Reuters – China’s HNA drops bid to buy Scaramucci’s SkyBridge due to regulatory hold-up
- The Hill – Alarmed by foreign deals, lawmakers eye new review power
- Bloomberg – A Top Senate Republican Slams Tech Lobby’s CFIUS Bill Push
- Industry Week – Should We Allow the Chinese to Buy Any US Company They Want?
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