Gibson, Dunn & Crutcher has helped Chinese semiconductor maker NAURA Technology Group Co. Ltd. obtain the first U.S. government approval for a Chinese acquisition submitted under President Donald Trump.
Beijing-based NAURA Technology announced on Thursday that it was cleared in December by the Committee on Foreign Investment in the United States to complete a $15 million deal to buy Allentown, Pennsylvania-based semiconductor cleaning equipment manufacturer Akrion Systems. The companies first announced the deal in August 2017.
Gibson Dunn Beijing corporate partner Xue Fang led a team advising NAURA on the transaction, with CFIUS matters handled by New York partner Jose Fernandez, who before joining the firm in 2013 was an assistant secretary of state and a member of CFIUS.
Perkins Coie Seattle partner Richard Oehler and Washington, D.C. counsel David Townsend acted as CFIUS counsel to Akrion Systems.*
NAURA’s CFIUS clearance came at a time when the committee has heightened its scrutiny of Chinese investments, with several deals collapsing as a result. Earlier this month, Chinese fintech company Ant Financial Services Group terminated its proposal to merge with Texas-based MoneyGram International Inc. after failing to secure CFIUS approval.
In 2017, Trump ordered Chinese-backed private equity firm Canyon Bridge to terminate a proposed acquisition of Lattice Semiconductor Corp. based on CFIUS’s recommendations.
The Lattice deal was not the only semiconductor deal to attract CFIUS’s attention. In 2016, former President Barack Obama also ordered a similar ban to prevent German chip maker Aixtron S.E. from selling its U.S. businesses to a Chinese investor.
Both Canyon Bridge and Aixtron’s suitor, Fujian Grand Chip Investment Fund, are majority-controlled by the Chinese government. So is NAURA; the Shenzhen-listed company is over 50 percent controlled by state-owned shareholders.
Lawyers and observers predicted that Chinese deals in the high-tech sector—especially in sensitive areas such as semiconductor manufacturing—would receive stricter scrutiny due to Chinese companies’ presumed close interaction with the government, regardless of the ownership structure.
Gibson Dunn’s Xue said that NAURA’s state ownership didn’t end up making much difference. “We told our clients: ‘It doesn’t matter whether you are privately owned or state-owned, in the eyes of CFIUS, you are all state-owned,’” she said.
The firm prepares clients for potential challenges, Xue said. And in this case, the lawyers were able to help NAURA gain clearance by putting themselves in the position of the committee members.
“CFIUS’s workload has more or less doubled compared to five years ago; they are overworked, and we wanted to make their job easier,” Xue said, noting that they were as specific and detailed as possible, did not withhold any information, anticipated potential questions, and prepared the answers in advance.
“I think the clearance of this deal dispelled the thinking that all Chinese investments must be disapproved,” Xue said. “But there’s no doubt that the overall environment towards Chinese deals will remain strict in 2018.”
*Updated 1/19: This story has been updated with Perkins Coie’s CFIUS counsel to Akrion Systems.