From: wolda002@umn.edu
Date: Thu Jul 01 2010 - 00:07:10 EDT
US blocks China fibre optics deal over security
By Stephanie Kirchgaessner in Washington
Published: June 30 2010 00:52 | Last updated: June 30 2010 00:52
The Obama administration has forced a US maker of fibre optics to abandon a
planned joint venture with China’s Tangshan Caofeidian Investment
Corporation because it believes the tie-up would threaten national
security.
The decision by the White House to scupper the move represents the second
time in less than a year that the administration has sought to block a
transaction involving a Chinese company because of security concerns.
It also offers a rare glimpse into the administration’s handling of
sensitive acquisitions following a drought in cross-border deals during the
financial crisis.
Emcore, which is based in New Mexico and makes components for fibre optics
and solar panels, said in a statement it had withdrawn a voluntary filing
with the Committee on Foreign Investment (Cfius) after the executive branch
panel said it had “regulatory concerns” over the venture.
Cfius, which is chaired by the Treasury department, conducts classified
investigations of deals on national security grounds.
Although it rarely blocks transactions formally – it has done so only
once – the panel alerts companies about a problem to allow them to drop
merger plans voluntarily.
Under the terms of the deal, Emcore was set to sell 60 per cent of its
fibre optics business to TCIC for $27.8m in cash. “While addressing any
regulatory requirements, Emcore remains committed to seeking other means of
co-operation,” the company said.
The Treasury department declined to comment.
Though the proposed deal was small, it will be studied in security circles.
Late last year, Washington forced another Chinese company to abandon a bid
to buy a 51 per cent stake in FirstGold, a Nevada mining group.
The government told lawyers working on that deal it was concerned about the
group’s proximity to a naval airbase. But one person familiar with the
transaction said it was also worried about the Chinese company’s
potential access to tungsten, a metal used in missiles.
The latest decision will also be watched by Huawei, the Chinese
telecommunications equipment maker that was blocked from acquiring 3Com, a
US technology group, by Cfius in 2008 and is seeking to make inroads in the
US.
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