CFIUS Clearance of Controversial Transaction Demonstrates Focus on National Security, Not Politics

The Committee on Foreign Investment in the United States (“CFIUS”) recently cleared the acquisition of bankrupt U.S. battery manufacturer A123, which had received significant U.S. government funding aimed at supporting green technologies, by Wanxiang, a large Chinese automotive components manufacturer. Despite significant political controversy and protectionist opposition to the transaction, CFIUS cleared the transaction with little apparent difficulty. This transaction underlines the fact that CFIUS review truly is focused on national security - though national security broadly defined - and that with the proper planning, advice and disclosure, the process can be navigated successfully even when the transaction would appear to present all of the hallmarks of a politically controversial transaction.