2010 CFIUS Annual Report CY09.doc - Department of the Treasury

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SECTION II: CRITICAL TECHNOLOGIES Introduction This section of the Annual Report to Congress has been prepared in accordance with section 721(m)(3) of the Defense Production Act of 1950 (50 U.S.C. App. 2170(m)(3)), as amended. Section 721(m)(3) requires the annual report to include: “(i) an evaluation of whether there is credible evidence of a coordinated strategy by 1 or more countries or companies to acquire United States companies involved in research, development, or production of critical technologies for which the United States is a leading producer; and “(ii) an evaluation of whether there are industrial espionage activities directed or directly assisted by foreign governments against private United States companies aimed at obtaining commercial secrets related to critical technologies.” Subsection II-A addresses the requirement laid out in (i), and subsection II-B addresses the requirement laid out in (ii). Definitions & Methodologies The definition of “critical technologies,” which includes technologies subject to certain U.S. export controls, is set forth in 31 C.F.R. § 800.209, Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons (the “CFIUS regulations”), published in the Federal Register on November 21, 2008. See the Appendix for this definition. “Critical technology companies” are U.S. companies that CFIUS identified for this report involved in research, development or production of critical technologies. The Appendix also provides the definition of “coordinated strategy” for purposes of this report, describes the methodology and data sources used to identify transactions involving critical technology companies (“critical technology transactions”), and the approach used to conduct the analyses required by Section 721 related to critical technologies. Finally, it lists the agencies and other entities that participated in preparing this section of the report. II-A. Whether There Is Credible Evidence of a Coordinated Strategy to Acquire Critical Technology Companies 1. Key Findings Based on our assessment of 2009 activity, we judge it unlikely that there is a coordinated strategy among one or more foreign governments or companies to acquire United States companies involved in research, development, or production of critical technologies for which the United States is a leading producer. 18
Indications of a coordinated strategy may go unobserved due to limitations on intelligence collection, or may be hidden or misconstrued because of foreign denial and deception activities. 2. Summary of Foreign M&A Activity in the United States Using the methodology described in the Appendix, CFIUS identified 98 completed foreign mergers with, or acquisitions of, U.S. critical technology companies involving acquirers from 26 countries and territories. CFIUS agencies and the intelligence community evaluated all 98 transactions for indications of a coordinated strategy to acquire U.S. critical technologies. 3. Frequency of Activity by Countries and Companies Identifying acquirers’ home countries may provide useful initial insights into the analysis of foreign acquisitions of U.S. critical technology companies. Table II-1 on the following page lists the originating countries for planned and completed acquisitions of U.S. critical technology companies in 2009: 19
Page 1: COMMITTEE ON FOREIGN INVESTMENT IN
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Page 6 and 7: Appendix A. Definition of “Critic
Page 8 and 9: A. Information on 2009 Covered Tran
Page 10 and 11: Covered Transactions by Sector, 200
Page 12 and 13: Computer and Electronic Products 20
Page 14 and 15: Professional, Scientific, and Techn
Page 16 and 17: Wholesale and Retail Trade, 2007-20
Page 18 and 19: Covered Transactions by Acquirer Ho
Page 20 and 21: D. Withdrawn Notices Parties cannot
Page 22 and 23: • Foreign control of U.S. busines
Page 26 and 27: Country Number of Transactions Unit
Page 28 and 29: Figure II-3 shows the regional brea
Page 30 and 31: publicly reported values by all for
Page 32 and 33: also were no subject M&A transactio
Page 34 and 35: APPENDIX A. Definition of “Critic
Page 36 and 37: C. Analyzing the Acquisitions of U.
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2010 CFIUS Annual Report CY09.doc - Department of the Treasury

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