Sidley Austin and Simpson Thacher & Bartlett’s work advising on a $103 million deal has come to naught because the Committee on Foreign Investment in the United States (CFIUS) will not allow Chinese conglomerate HNA Group to invest in U.S. in-flight entertainment service provider Global Eagle Entertainment Inc.
Los Angeles-based Global Eagle announced on Tuesday in a regulatory filing that the proposed $103 million investment by HNA affiliate Beijing Shareco Technologies Co. Ltd. has been terminated because the deal failed to win approval from CFIUS.
The Committee on Foreign Investment in the United States is an interagency committee charged with evaluating sales of U.S. businesses to foreign entities to determine the impact on America’s national security.
In November, Beijing Shareco announced that it planned to invest $103 million for a 10 percent stake in Global Eagle, and the two companies would form a joint venture to provide in-flight entertainment service exclusively to HNA airlines. Beijing Shareco said it would invest up to $416 million in total once the joint venture was launched.
Sidley Austin and China’s Fangda Partners were legal counsel to Beijing Shareco, according to a statement put out by Global Eagle.
Simpson Thacher advised Global Eagle on the transaction. The team included a five-lawyer regulatory team, including partner Peter Thomas in Washington, D.C., counsel Ellen Frye and former senior counsel Michael Naughton in New York. (Naughton joined Weil, Gotshal & Manges in March of this year.)
HNA has made several big-ticket outbound deals over the past two years. In October, the parent company of Hainan Airlines, advised by Weil, made a $6.5 billion investment for a quarter of Hilton Worldwide Holdings Inc. In the same month, HNA subsidiary Avolon, represented by both Weil and Freshfields Bruckhaus Deringer, announced a $10 billion acquisition of New York-based CIT Group’s aircraft leasing business.
Dublin-based Avolon itself was acquired by HNA about a year earlier for $2.6 billion; HNA was advised by Sidley on that deal, while Avolon turned to Weil. Before that, Weil also acted for HNA on a $2.8 billion acquisition of cargo company Swissport International Ltd. In the hotel realm, the company also in 2016 acquired Minnesota-based Carlson Hotels Inc., which has a 1,400-hotel portfolio, for $2 billion; Hogan Lovells advised HNA on that deal.
Among HNA’s several pending deals, the Chinese group’s joint-bid, with an entity named RON Transatlantic Offshore Ltd., for New York-based hedge fund SkyBridge Capital has received much attention of late. SkyBridge was founded and previously managed by Anthony Scaramucci, who was named last week White House director of communications by the Trump administration. The deal was expected to close in June, but it has been delayed. According to Reuters, CFIUS is currently reviewing the deal, which cannot go forward without approval. SkyBridge is advised by Shearman & Sterling on the sale.