Chinese deals topped U.S. security reviews in 2015: Treasury report

WASHINGTON (Reuters) - Proposed Chinese acquisitions of American companies led U.S. government national security reviews in 2015 for the fourth year in a row, the Treasury Department said in a report released on Wednesday.

U.S. Treasury Secretary Steve Mnuchin gestures during a news briefing at the White House in Washington, U.S., to announce sanctions against Venezuela, August 25, 2017. REUTERS/Yuri Gripas

The Treasury’s latest annual report for the Committee on Foreign Investment in the United States, or CFIUS, showed that Chinese transactions accounted for 29 of the 143 deals reviewed in 2015, the most recent year for which data has been made available.

CFIUS, a secretive interagency panel chaired by the Treasury, reviewed 24 Chinese transactions in 2014, 21 in 2013 and 23 in 2012. The Treasury report did not identify the specific acquisitions reviewed.

Canada was second in 2015 CFIUS reviews, with 22 transactions, followed by Britain with 19 and Japan with 12.

The report showed that 66 transactions, or 46 percent, went to full investigations in 2015, compared with 51 deals, or 35 percent, going to full investigations in 2014.

Chinese acquisitions of U.S. companies have increased in volume and value since 2015 and have come under increasing scrutiny.

There were 87 announced acquisitions of U.S. companies by Chinese firms in 2017 through late July, compared with 77 deals in the corresponding period of 2016. Reuters reported that CFIUS had objected to at least nine deals from foreign buyers so far this year.

U.S. President Donald Trump last week blocked a Chinese-backed private-equity firm from buying U.S. chipmaker Lattice Semiconductor Corp LSCC.O after a CFIUS review, sending a strong signal to Beijing his administration would oppose deals that involve potential military applications.

In the latest report, the Treasury said there were no presidential decisions to block proposed acquisitions in 2015 but that 13 proposed transaction were withdrawn.

Three of those were abandoned after CFIUS informed the involved parties that it was unable to identify measures that would resolve national security concerns, or offered terms that the parties chose not to accept.

Transaction parties that withdrew review notices filed new ones in eight cases in 2015 and one case in 2016, the Treasury said. Mitigation measures were adopted on 11 of the 143 transactions to resolve national security concerns.

Manufacturing accounted for 68 of the CFIUS reviews in 2015, with computer and electronic manufacturing accounting for 33 of those, according to the Treasury report, reflecting China’s drive to acquire sophisticated semiconductor design and manufacturing capabilities.

Reporting by David Lawder; Editing by Peter Cooney