This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

CFIUS Back On The Radar With IBM, Zoltek Deals

NEW YORK (The Deal) -- After a lull in high-profile deals that raise national security concerns, the Committee for Foreign Investment in U.S. appears to be back in the spotlight as China's Lenovo Group on Thursday agreed to buy the low-power server business of International Business Machines  (IBM) for $2.3 billion.

Lawyers who represent clients before CFIUS, the Treasury Department-led panel that reviews acquisitions of U.S. assets by foreign buyers for national security threats, said the transaction would almost certainly get a lengthy examination from CFIUS that would extend beyond the initial 30-day review phase and into a subsequent 45-day formal investigation.

CFIUS has not undertaken a high-profile investigation since September, when it cleared Shuanghui International Holdings' $7.1 billion takeover of Smithfield Foods.

Kaye Scholer partner Farhad Jalinous, who represents clients before CFIUS, said an increasing share of takeovers here by foreign buyers undergo the full 75-day CFIUS regime but that this one is particularly likely to because of the widespread use of IBM's x86 services in the U.S. government.

"The technology seems to be considered fairly low-level in the industry now, there is an ample number of competitors, but what [is] unknown is the extent these IBM servers are used in government infrastructure and the extent they are used in way that may create vulnerabilities for national security," he said.

IBM is being represented before CFIUS by O'Melveny & Myers partner Ted Kassinger.

Lenovo is well-known to CFIUS because of the company's 2005 purchase of IBM's personal computer business. CFIUS approved that deal with conditions over the objections of some U.S. lawmakers.

Lenovo did not reveal the obligations it was put under, but company officials said they did not have to compromise over the location of Lenovo facilities in sensitive research areas as some had predicted, nor were limits put on Lenovo's ability to sell PCs to U.S. agencies.

Regarding Lenovo's latest deal, Jalinous said that from the outside it is hard to assess the extent to which national security vulnerabilities might require mitigation measures to be imposed by the government. He said Lenovo is likely to gain some benefit from being a known quantity to CFIUS.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,985.61 +78.99 0.47%
S&P 500 1,972.83 +9.12 0.46%
NASDAQ 4,419.0340 +27.5710 0.63%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs