Public interest scrutiny in the M&A process is on the increase globally, against the backdrop of amplified protectionist rhetoric and political anxieties about the impact of foreign direct investment (FDI).
Heightened geopolitical tensions have accelerated these trends, with existing FDI regimes being expanded and new ones being adopted (particularly in the EU). This presents additional hurdles and uncertainties to navigate in the execution of cross-border M&A, exacerbated by a lack of transparency in decision-making in many FDI regimes that can make it difficult for investors to understand how the review process will play out in practice and to gauge potential execution risk for a particular transaction.
From CFIUS in the United States to FIRB in Australia, it is essential that formal and informal FDI/public interest review processes and intervention risks are taken into account in deal planning and execution. Although certain acquirers from China have tended to bear the brunt of prohibition decisions under FDI regimes in the past, they are no longer the sole focus and acquirers from a range of countries have had their deals scrutinised. In addition, the concept of “national security” continues to be extended, to include not only the defence sector and critical infrastructure, but also communications assets, advanced technology and data, and – influenced by the pandemic – healthcare. Whilst some of the amendments directly related to the pandemic may ultimately prove to be temporary, the overall picture is likely to be one of structural change.
Our global FDI team (drawn from our Competition, Regulation and Trade, Mergers & Acquisitions and Dispute Resolution practices) has extensive experience in formulating and implementing coordinated strategies to secure global FDI clearances and successful completion, taking this ever-changing landscape into account.
To aid investors in considering potential deal hotspots, we have produced an interactive map and country-by-country guide summarising the FDI/public interest control processes and trends in key jurisdictions. Click here for a teaser of the guide and email FDIPublications@hsf.com to receive your full copy.
