In the Headlines
October 25, 2022

When CFIUS Leaks Create Leverage


CFIUS and Industrial Security attorney Antonia Tzinova was quoted in a Law360 article about news of a potential national security review of Elon Musk's bid to acquire Twitter. This potential review caused shares to tumble just days ahead of Delaware Chancery Court's Oct. 28 deadline for closing the deal, prompting questions as to who talked to the media and why.

The article discusses how Bloomberg News recently cited unnamed sources reporting that the Biden Administration was considering putting the deal as well as Elon Musk's satellite communications service, Starlink, under the microscope of the Committee on Foreign Investment in the United States (CFIUS), which assembles 16 federal offices to review foreign acquisitions for potential risks to the U.S.

Ms. Tzinova stated the situation recalled Qualcomm Inc.'s unilateral move to alert CFIUS to a hostile takeover attempt in 2017 by Broadcom Ltd., which was based in Singapore at the time. The committee promptly shut it down.

"One party might feel this is a way out if the committee, for example, decides to block the transaction, or if there is a heavy mitigation agreement," Ms. Tzinova said. "Usually these agreements include a clause that the buyer is not bound to accept just any mitigation and, typically, the way this is phrased is it's within their sole discretion to decide whether to accept CFIUS' mitigation or not."

READ: When CFIUS Leaks Create Leverage (Subscription required)

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