Date: 02-25-2008
After close inspection and scrutiny, the Committee on Foreign Investment in the United States (CFIUS) signaled its intention to block a transaction involving China-based Huawei Technologies Co, private-equity firm Bain Capital, and 3Com, the U.S.-based network gear maker. Both Huawei and Bain Capital backed out of the deal, raising concerns among foreign investors about business deals being unnecessarily entangled with national security concerns. The scuttled deal also suggests difficulties for Motorola Inc. in its efforts to find a foreign company willing to make a public bid for its handset unit. Although analysts had predicted that it could attract an offer from some of China’s well-known companies, those companies are likely to think twice after this week’s rebuff. John Frisbie, president of the U.S.-China Business Council, complained about the CFIUS decision, saying, “Legitimate national security needs need to be protected, but don’t use national security for protectionist economic policies.”
