US media the last hurdle for China buyouts

… what if the transaction were a Chinese state-owned enterprise (SOE) offering to buy a US firm? How would US regulators feel about this? What rules would be invoked?

Robert M Kimmitt, deputy secretary of the US Department of the Treasury, has outlined the following three “triggers for policy reviews”. The first is whether the transaction will perpetuate “undesirable underlying macroeconomic and financial policies”. In other words, would the transaction operate “within the framework of sound domestic fiscal, monetary and exchange-rate policies”. The second trigger would be whether the transaction would have an impact on “financial stability”. The third possible trigger for policy intervention would occur when the transaction would take active control of a private company, especially if the company is involved with national security. Even if there are no national security concerns, the third trigger could be invoked if the buyer seeks board seats or unusual voting rights. The acid test is whether the transaction would be classified as a “passive” or an “active” transaction.

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