Already-increasing scrutiny on U.S.-China deals could be magnified under the incoming Trump administration, not only hurting the potential for future deals but also putting agreements already in the works at risk.
The president-elect has taken an aggressive stance on U.S. relations with China, and some of the figures poised to serve him in the White House indicate his administration will follow the lead.
Peter Navarro, whom Donald Trump has tapped to serve as director of the National Trade Council, is a China hawk of long standing and author of the 2012 book Death by China.
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Trump's Commerce Secretary pick, Wilbur Ross, has taken a growing antagonistic stance toward the country, though he was once much more sympathetic, and Robert Lighthizer, whom Trump intends to nominate as U.S. Treasury representative, has expressed a hostile attitude as well. The former deputy U.S. trade representative in the Reagan administration and current partner at Skadden, Arps, Slate, Meagher & Flom has argued on numerous occasions that U.S. policymakers should take a more aggressive stance on China.
The group's ascension to power would appear to indicate that a progressively tense relationship between the U.S. and China is inevitable, and the effects could stretch far and wide, including into the deal world.
"It's going to become more difficult for Chinese companies to purchase U.S. companies," said Isaac Boltansky, senior vice president and policy analyst at Washington-based investment bank Compass Point Research & Trading.
Even before Trump, the U.S. has taken numerous steps recently to clamp down.
The Obama administration has brought 14 World Trade Organization challenges against China, according to the office of the USTR, and won every dispute decided. The Government Accountability Office in September agreed to a bipartisan request from Congress that it review the Committee on Foreign Investment in the United States, or Cfius, and its practices in reviewing foreign acquisitions in the United States. The Congressional request, spearheaded by North Carolina Republican Robert Pittenger, specifically targeted China and called into question deals in telecommunications, media and agriculture.
Chinese companies' acquisitions of American companies in a number of industries have triggered alarm bells by watchdog groups, too, including media deals like Dalian Wanda's purchase of Legendary Entertainment movie studio, its 49% stake in Paramount Pictures and its purchases of U.S. movie chains AMC Entertainment Holdings (AMC) and Carmike Cinemas (CKEC) . Finance deals like a group of Chinese investors' proposed acquisition of the Chicago Stock Exchange have raised eyebrows as well.
A November report issued by the congressionally chartered U.S.-China Economic and Security Review Commission panel urged lawmakers to approve legislation to authorize Cfius to bar Chinese state-owned companies from acquiring U.S. businesses.
The Obama administration on Friday recommended steps the U.S. government can take to secure America's semiconductor industry.
Mickey Kantor, partner at law firm Mayer Brown and former U.S. trade representative and secretary of commerce under the Clinton administration, warned that strained relations that could be brought up by the Navarro-Ross-Lighthizer triumvirate under Trump may disrupt much more than the deal environment.
"Chinese companies, both state-owned and nonstate-owned, have invested heavily in the United States over the last three, four, five years, and their investments are large and meaningful," he said. "We are joined at the hip with China, and we are either going up or down together."
Trump transition team representatives did not return request for comment on the issue.
The likely paradigm shift could put a number of U.S.-China deals already underway in peril. Here are eight, per TheDeal's database, that could be affected:
Global Eagle Entertainment: HNA Group - Global Eagle Entertainment
Beijing Shareco Technologies, a subsidiary of Chinese aviation conglomerate HNA, reached a $103 million agreement with Global Eagle Entertainment (ENT) as part of a joint venture to provide inflight entertainment and connectivity in China and HNA airlines flights. Through the deal, Beijing Shareco Technologies acquired a 9.9% stake in GEE. The deal is subject to the approval of Cfius and the Defense Security Service of the U.S. Department of Defense.
Dick Clark Productions: Dalian Wanda - Dick Clark Productions
Dalian Wanda's agreement to buy Dick Clark Productions from Eldridge Industries for $1 billion is among the media deals causing some consternation in Washington. The production company, named for radio and television legend Dick Clark, is behind the Golden Globes awards, So You Think You Can Dance and live television event The Passion Live.
Dick Clark Productions produces the Miss America pageant, a competitor of the Miss Universe Organization's Miss USA contest, which Trump previously owned.
Harris CapRock Communications: SpeedCast International - Harris
Satellite communications company SpeedCast International announced a deal with Harris (HRS) to acquire Harris' CapRock Communications' commercial business for $425 million. The deal is a way for the Hong Kong-based SpeedCast to gain a presence in the energy sector and expand its presence in the cruise sector.
Hilton Worldwide Holdings: HNA - Blackstone
Blackstone (BX) announced the sale of its 25% stake in Hilton Worldwide Holdings (HLT) to China-based HNA in October. As part of the deal, HNA also gets to appoint two members of Hilton's board. The agreement is subject to the approval of Cfius and the DSS.
One mitigating factor: Blackstone chairman and CEO Stephen Schwarzman will have Trump's ear. The executive will be chairman of a forum of business leaders tapped to advise the president that also includes Walt Disney's (DIS) Bob Iger and Jack Welch, formerly of General Electric (GE) .
Genworth Financial: Asia Pacific Global Capital - Genworth Financial
Asia Pacific Global Capital's $2.7 billion deal to acquire Richmond, Va.-based life and mortgage insurer Genworth Financial (GNW) could face more scrutiny in the wake of the U.S.-China Economic and Security Review Commission. Analysts say the agreement could at least face a lengthier national security review.
AppLovin: Orient Hontai Capital - AppLovin
Orient Hontai Capital agreed to acquire a majority interest of mobile ad startup AppLovin in late September. CEO Adam Foroughi said at the time his firm chose to partner with the Chinese private equity firm because of its "strong connections in the Chinese market."
In other words, it's a play for an American company to gain ground in China, not vice-versa.
Novatel Wireless' Mobile Broadband Business: T.C.L. Industries Holdings (H.K.) - Novatel Wireless
T.C.L. Industries Holdings (H.K.) agreed to acquire Novatel Wireless's (MIFI) mobile broadband business for $50 million in September. Cfius informed the parties that it will conduct a 45-day review of the sale in December.
Emerald Performance Materials' Polymer Additives and Nitriles Business: Jiangsu Sinorgchem Technology - DyStar
Jiangsu Sinorgchem Technology announced its agreement to acquire the Polymer Additives and Nitriles businesses of Emerald Performance Materials from DyStar for approximately $114.6 million in May.
Sinorgchem is a subsidiary of state-owned Chinese company Sinochem. If there were a clampdown on state-owned deals, it could be brought to a halt.