On January 22, Philips announced that it had stopped selling its lighting components and automotive lighting business to Chinese investors due to opposition from US regulators.
Philips said that although the company tried to eliminate the concerns of the Committee on Foreign Investment in the US (CFIUS) by doing a lot of work, CFIUS has not approved Philips' plan to sell 80% of Lumileds.
Philips CEO Frans van Houten said he was "very disappointed" with CFIUS's decision and that Philips will now negotiate with other potential buyers who are interested in the business. In early trading in Amsterdam, Philips shares fell 1.6%. In October last year, Philips said that CFIUS had expressed “some unexpected concerns†about its deal with Go Scale Capital, a venture capital fund led by China's venture capital firm Jinshajiang.
On March 31, 2015, led by GO Scale Capital, Asia-Pacific Resource Development Investment and Nanchang Industrial Holding Group and other Chinese-funded consortiums supported by the Chinese and foreign consortium, and Philips reached an agreement to acquire 80% of Lumileds. The deal is worth about $3.3 billion and Philips will retain the remaining 20% ​​of Lumileds.
GO Scale Capital is a fund formed by a combination of Jinshajiang Venture Capital and Oaks Investment Partners. The consortium led by the consortium intended to patent more than 600 Philips LED production and automotive lighting after completing the acquisition through regulatory approval. Transfer to Lumileds. At the same time, Wu Shenjun, co-founder and managing director of Jinshajiang Venture Capital, became the interim president of Lumileds.
For Philips, the deal is an important step in its transformation, and it plans to handle the rest of the lighting business by listing or selling it. Philips plans to focus on the medical device business such as medical scanners and consumer products such as coffee machines.
But CFIUS has no adult beauty. Because Lumileds has multiple manufacturing and R&D bases in the US, it has expressed concern about the deal and has not approved the acquisition of a Chinese consortium. Olofsson said that if the sale to new buyers Lumileds, the price may be much lower, because the department's recent profitability is not good.
Wu Shenjun said, "Jinshajiang Venture Capital has not given up the transaction, and the Chinese consortium will still cooperate with Philips to appeal to the US authorities."
CFIUS is responsible for assessing cross-border transactions at the US national security level, and it has tightened its review of cross-border technology transactions for Chinese buyers in the last two years. The Wall Street Journal reported in the second half of 2015 that CFIUS had extended its investigation into the acquisition of chip maker IntegratedSiliconSoluTIon by the Chinese consortium. Earlier in 2015, Tsinghua Unisplendour tried to acquire Micron Technology for $23 billion, but the deal was not reached. Some sources said that part of the reason for the breakdown of the negotiations was that the transaction was difficult to obtain approval from US regulators.
CFIUS, what is sacred?
According to the information, the US Foreign Investment Committee (CFIUS) is a federal government committee established in 1988 (starting in 1975 by President Ford's Executive Order No. 11858, until 1988), headed by 11 government agencies and Composed of five observers, the US Treasury Secretary serves as the chairman of the committee. Representatives of CFIUS come from the Ministry of Defence, the Ministry of State, and the Department of Homeland Security to review foreign investment transactions that may affect US national security.
CFIUS undertakes the task of protecting US national security and its critical infrastructure and is able to withstand inspections from the US Congress and the President. As a result, CFIUS may prefer to approve investors with close ties to the US (such as Australia, the United Kingdom, or Japan) more than Others. In practice, CFIUS usually conducts more detailed investigations of investors from China or certain Middle Eastern countries. Another important factor that CFIUS will consider is whether the acquirer is under the control of a foreign government.
The US government generally considers whether to approve the investment project by whether it involves US defense production capacity, whether it involves selling to a specific country, reselling military technology, and whether it affects the US's technological leadership in the national security field.
CFIUS spans 13 departments, the office is located in the Ministry of Finance, and the Ministry of Finance is the lead unit. The following 12 departments are involved: Ministry of Finance, State Council, Ministry of National Defense, Ministry of Commerce, Trade Negotiation Representative Office, Ministry of Justice, National Land The Ministry of Security, as well as the President’s National Security Adviser, the President’s Economic Policy Assistant, the Chairman of the Economic Advisory Board, the Director of the Office of Science and Technology, and the Director of the Office of Management and Budget. Because the members of the committee have different industry interests, there are often differences in foreign mergers and acquisitions. Generally, after receiving the notice about the merger, the committee started the investigation in 30 days. If the member agrees that there is no security threat, the review ends here and the M&A agreement can continue to be fulfilled. But with only one member dissenting, the committee must also conduct a formal investigation that lasted for 45 days and then make recommendations to the president on whether to block the acquisition. The president then decides within 15 days, and only the president has the right to block or ban mergers and acquisitions. In reality, however, very few transactions enter the stage of a presidential decision – if the transaction is not approved at the initial review stage, CFIUS will usually require the parties to agree to modify the form of the transaction (eg, the divestiture of certain assets or businesses). Instead of presidential approval. (This article comprehensive 21st Century Business Herald, NetEase Technology and Historical Data Report)
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