What Happens If CFIUS Finds A National Security Issue?
If, during a review or investigation, CFIUS identifies an unresolved national security concern, it may seek to resolve such concern through the imposition of undertakings on the parties, including in the form of commitment letters on specific issues or “mitigation agreements” addressing a broader range of security objectives. Parties that enter into such undertakings do so in exchange for a clearance from CFIUS, and to avoid the risk of Presidential intervention. On occasion, however, CFIUS has rejected any solution other than the divestiture of U.S. assets or operations deemed too sensitive for the particular foreign acquirer to retain. In these cases, the parties typically will admit defeat rather than force the President to issue a formal divestiture order. The most recent examples include (1) the negotiated exit in December 2006 by Smartmatic International, a Venezuela-owned firm, from its ownership of Sequoia Voting Systems, a U.S. supplier of voting machine technology used for el
