President's Decision is Meaningful to Searchers Looking Overseas or Investing From Overseas

For anyone who is involved in international transactions, the recent Executive Order issued by President Trump requiring the divestiture of assets owned by Emcore and acquired by HieFo is very instructive. While Hiefo is a corporation formed in Delaware, it is considered to be owned and controlled by interests in the People's Republic of China. As such, the acquisition was required to be reviewed by CIFIUS, the Committee on Foreign Investment in the United States, an agency of the United States, led by the Treasury Department, which is charged with the oversight of transactions that affect US strategic interests. The concern in the HieFo case involved Chinese control over chip and wafer technology deemed of strategic national importance, and the Executive Order requires a complete divestiture of the Emcore assets acquired by Hiefo within 180 days of its issuance. Particularly for searchers looking to acquire or invest in companies in the defense, security, infrastructure, AI or other sensitive technologies, this case is important in reminding us of the broad powers which CIFIUS has to block, and even unwind, transactions within its purview. If you are investing in a cross-border transaction in one of these (and potentially other) tech sectors, it is important to seek competent legal advice as to whether CFIUS approval may be required, and consider communicating with it ahead of agreement on the final transaction terms to avoid any potential issues if concerns are raised. Of course, this is different from any of the US regulations involving export controls and licenses, which is another area where searchers in this space need to be vigilant.