COMMITTEE ON 

FOREIGN INVESTMENT 

IN THE UNITED STATES 

 

ANNUAL REPORT 

TO CONGRESS

Report Period: CY 2011 

Issued: December 2012 

PUBLIC/UNCLASSIFIED VERSION 

CFIUS ANNUAL REPORT TO CONGRESS 

Report Period: CY 2011 

Issued: December 2012 
This page intentionally left blank. 
i

TABLE OF CONTENTS 

Section I: Covered Transactions 

Introduction .................................................................................................................................. 1 

A. Information on 2011 Covered Transactions ............................................................................ 2 

B. Specific, Cumulative, and Trend Data on Covered Transactions, 

 Withdrawals, and Investigations ....................................................................................... 3 

C. Covered Transactions by Business Sector and Country ......................................................... 4 

 1. Covered Transactions by Business Sector of U.S. Companies: 

 2009-2011 ...................................................................................................................... 4 

 2. Covered Transactions by Country or Economy: 2009-2011 ............................................. 14 

D. Withdrawn Notices ................................................................................................................ 17 

E. Mitigation Measures .............................................................................................................. 18 

F. Perceived Adverse Effects of Covered Transactions ............................................................ 20 

Section II: Critical Technologies 

Introduction ................................................................................................................................ 23 

Definitions and Methodologies ................................................................................................... 23 

A. Whether There Is Credible Evidence of a Coordinated Strategy to 

 Acquire Critical Technology Companies .......................................................................... 23 

 1. Key Findings ..................................................................................................................... 23 

 2. Summary of Foreign M&A of U.S. Critical Technology Companies .................................. 24 

 3. Frequency of Activity by Countries/Economies and Companies ...................................... 24 

B. Whether Foreign Governments Used Espionage Activities to 

 Obtain Commercial Secrets Related to Critical Technologies ......................................... 27 

 1. Key Finding ....................................................................................................................... 27 

Section III: Foreign Direct Investment in the United States by Countries that Boycott 

Israel or Do Not Ban Terrorist Organizations 

Introduction ................................................................................................................................ 28 

A. Summary of Findings and Conclusions ................................................................................. 28 

B. Study Methodology ................................................................................................................ 29 

 1. Identification of Relevant Countries ................................................................................... 29 

 2. Scope of FDI ...................................................................................................................... 29 

C. Detailed Findings ................................................................................................................... 30 

 1. Identification of the Subject M&A Transactions ................................................................. 30 

 2. National Security Effects of the Subject M&A Transactions .............................................. 31 

Appendix

A. Definition of “Critical Technologies” ........................................................................................ 32 

B. Methodology and Data Sources Used to Identify U.S. Critical 

 Technology Companies Acquired by Foreigners ............................................................ 32 

C. Analyzing the Acquisitions of U.S. Critical Technology Companies ...................................... 33 

D. Defining “Coordinated Strategy” for Purposes of Section II of this Annual Report ................ 34 

E. Participating Agencies and Entities – Critical Technologies Section II .................................. 34 
ii

This page intentionally left blank.
1

SECTION I: COVERED TRANSACTIONS 

Introduction 

This section of the CFIUS Annual Report to Congress has been prepared in accordance with 

section 721(m) of the Defense Production Act of 1950 (50 U.S.C. App. 2170), as amended by 

the Foreign Investment and National Security Act of 2007, or “FINSA” (Pub. L. No. 110-49). 

Section 721(m)(2) requires the annual report on covered transactions to provide: 

“(A) A list of all notices filed and all reviews or investigations completed during the period, with 

basic information on each party to the transaction, the nature of the business activities or 

products of all pertinent persons, along with information about any withdrawal from the process, 

and any decision or action by the President under this section. 

(B) Specific, cumulative, and, as appropriate, trend information on the numbers of filings,1

investigations, withdrawals, and decisions or actions by the President under this section. 

(C) Cumulative and, as appropriate, trend information on the business sectors involved in the 

filings which have been made, and the countries from which the investments have originated. 

(D) Information on whether companies that withdrew notices to the Committee in accordance 

with subsection (b)(1)(C)(ii) have later re-filed such notices, or, alternatively, abandoned the 

transaction. 

(E) The types of security arrangements and conditions the Committee has used to mitigate 

national security concerns about a transaction, including a discussion of the methods that the 

Committee and any lead agency are using to determine compliance with such arrangements or 

conditions. 

(F) A detailed discussion of all perceived adverse effects of covered transactions on the national 

security or critical infrastructure of the United States that the Committee will take into account in 

its deliberations during the period before delivery of the next report, to the extent possible.” 

 

1

 For purposes of this Annual Report, “filings” means notices filed under section 721. 
2 

A. Information on 2011 Covered Transactions 

The classified version of this report contains a table listing all 111 notices of transactions that 

were filed with CFIUS in 2011 and that CFIUS determined to be covered transactions under 

section 721. That table sets forth information on the acquirer and the U.S. business acquired, 

including the nature of their business activities or products, and details on any withdrawal. That 

table is not included here because section 721 prohibits its public disclosure, but aggregate 

information regarding those 111 notices is provided below: 

 CFIUS conducted a “review” with respect to the 111 notices of covered transactions filed 

with CFIUS. 

 CFIUS also conducted a subsequent “investigation” with respect to 40 of those 111 

notices. 

 Six of the notices were withdrawn. In four of these cases, the parties filed new notices in 

2011; in two cases, the parties filed new notices in 2012. 

 The President did not take action to block or prohibit any transactions in 2011. 
3

B. Specific, Cumulative, and Trend Data on Covered Transactions, 

 Withdrawals, and Investigations 

In the years 2009 through 2011, companies filed 269 notices of transactions that CFIUS 

determined to be covered transactions under section 721. About four percent (12 notices) of 

such notices were withdrawn during the review stage, five percent (13 notices) were withdrawn 

during the investigation stage, and 37 percent (100 notices) resulted in an investigation. There 

were no transactions that resulted in a Presidential decision. 

There was an appreciable increase in the number of notices from 2009 to 2010, coinciding with 

recovery from the global financial crisis, followed by a further increase in 2011. As shown in 

Table I-1, the number of notices increased from 65 in 2009 to 93 in 2010 and to 111 in 2011. 

The percentage of notices proceeding to investigation has remained fairly constant over the 

three years at 38 percent in 2009 and 2010 and 36 percent in 2011. 

Apart from the general correlation of the number of notices with macroeconomic conditions, the 

information in the table below is not indicative of discernible trends. CFIUS considers each 

transaction on a case-by-case basis, and the disposition of any particular case – be it 

withdrawal from review or investigation, closing in review or investigation, or Presidential 

decision – depends on the unique facts and circumstances of that case. 

Covered Transactions, Withdrawals, and Presidential Decisions 

2009 - 2011 

Year Number of 

Notices 

Notices 

Withdrawn 

During Review 

 Number of 

Investigations 

Notices 

Withdrawn 

During 

Investigation 

Presidential 

Decisions 

2009 65 5 25 2 0 

2010 93 6 35 6 0 

2011 111 1 40 5 0 

Total 269 12 100 13 0 

Table I-1: Covered Transactions, Withdrawals, and Presidential Decisions 2009-2011 
4 

C. Covered Transactions by Business Sector and Country 

1. Covered Transactions by Business Sector of U.S. Companies: 2009-2011

The notices of covered transactions filed with CFIUS during the 2009-2011 period involved a 

wide range of industrial subsectors.2

 Broadly, more than one third of such notices were in the 

manufacturing sector (106, or 39 percent), while approximately one third of the notices were in 

the finance, information, and services sector (95, or 35 percent). The remainder of notices were 

in the mining, utilities, and construction sector (48, or 18 percent) or the wholesale, retail, and 

transportation sector (20, or seven percent). 

The table and chart below provide a breakdown by sector and by year of the 269 notices of 

covered transactions cumulatively filed with CFIUS from 2009 through 2011. The data below 

show that, as in 2010, the greatest number of filings occurred in the manufacturing and the 

finance, information, and services sectors. The percentage of notices in the manufacturing 

sector increased from 2009 to 2010 (from 32 percent to 39 percent), and increased further in 

2011 (from 39 percent to 44 percent). In 2011, the percentage of notices in the finance, 

information, and services sector returned to 2009 levels (34 percent) after having increased 

from 2009 to 2010. The percentage of notices in the mining, utilities, and construction sector 

decreased from 2009 to 2010 and held steady in 2011. 

Covered Transactions by Sector and Year, 2009-20113

Year Manufacturing 

Finance, 

Information, and 

Services 

Mining, 

Utilities, and 

Construction 

Wholesale, 

Retail, and 

Transportation 

Total 

2009 21 (32%) 22 (34%) 19 (29%) 3 (5%) 65 

2010 36 (39%) 35 (38%) 13 (14%) 9 (10%) 93 

2011 49 (44%) 38 (34%) 16 (14%) 8 (7%) 111 

Total 106 (39%) 95 (35%) 48 (18%) 20 (7%) 269 

Table I-2: Covered Transactions by Sector and Year, 2009-2011 

Covered Transactions by Sector (2009-2011)

0

10

20

30

40

50

60

2009 2010 2011

Number of Covered Transactions

Manufacturing Finance, Information, and Services

Mining, Utilities, and Construction Wholesale, Retail, and Transportation

Covered Transactions by Sector 2009-2011 

 

2

 Broad sectors are defined using North American Industry Classification System (NAICS) codes of the target 

company. The NAICS code assigned to each target company is based upon information provided in the notice. 3

 Percentages do not sum to 100 percent due to rounding. 
5

Manufacturing accounted for 39 percent (106 notices) of all notices filed with CFIUS from 2009 

through 2011. The computer and electronic products subsector accounted for 50 percent (53 

notices) of the 106 manufacturing sector notices during the period, up slightly from 48 percent of 

manufacturing notices filed from 2008 through 2010. The transportation equipment subsector 

accounted for 22 percent (23 notices) of manufacturing notices, an increase from 16 percent of 

manufacturing notices filed from 2008 through 2010. The electrical equipment, appliance, and 

component subsector accounted for nine percent (10 notices) and the machinery subsector 

accounted for eight percent (eight notices). 

Manufacturing 

2009-2011 NAICS Code Number of Notices 

% of Total 

Manufacturing4

Computer and Electronic Products 334 53 50% 

Transportation Equipment 336 23 22% 

Electrical Equipment, Appliance, and 

Component 335 10 9% 

Machinery 333 8 8% 

Chemical 325 4 4% 

Fabricated Metal Products 332 3 3% 

Primary Metal 331 1 1% 

Textile Product Mills 314 1 1% 

Petroleum and Coal Products 324 1 1% 

Plastics and Rubber Products 326 1 1% 

Miscellaneous 339 1 1% 

Table I-3: Covered Transactions from the Manufacturing Sector 

Covered Transactions from the Manufacturing Sector 

 

4

 Percentages do not sum to 100 percent due to rounding. 

Manufacturing

2009-2011

Computer and Electronic

Products 

50%

Transportation Equipment

22%

Electrical Equip., Appl., & 

Comp.

9%

Machinery

8%

Fabricated Metal Products

3%

Primary Metal 

1%

Textile Product Mills

1%

Petroleum and Coal 

Products

1%

Plastics and Rubber

Products 

1%

Miscellaneous 

1%

Other

12%

Chemical

4%
6 

Navigational, measuring, electro-medical, and control instruments manufacturing accounted for 

34 percent (18 notices) of the 53 notices in the computer and electronic products subsector from 

2009 through 2011, up slightly from 32 percent of notices in this subsector filed from 2008 

through 2010. Communications equipment manufacturing accounted for 30 percent (16 

notices) of the notices in this subsector, and semiconductor and other electronic component 

manufacturing accounted for 26 percent (14 notices), down slightly from 32 percent and 27 

percent, respectively, of notices in this subsector filed from 2008 through 2010. 

Computer and Electronic Products 

2009-2011 NAICS Code Number of Notices 

% of Total 

Computer and 

Electronic 

Products 

Navigational, Measuring, Electromedical, and 

Control Instruments Manufacturing 3345 18 34% 

Communications Equipment Manufacturing 3342 16 30% 

Semiconductor and Other Electronic 

Component Manufacturing 3344 14 26% 

Computer and Peripheral Equipment 

Manufacturing 3341 4 8% 

Manufacturing and Reproducing Magnetic and 

Optical Media 3346 1 2% 

Table I-4: Covered Transactions from the Computer and Electronic Products Subsector 

Computer and Electronic Products 

2009-2011

Manufacturing and 

Reproducing Magnetic and 

Optical Media 2%

Computer and Peripheral 

Equipment Manufacturing 8%

Semiconductor and Other 

Electronic Component 

Manufacturing 26%

Communications Equipment 

Manufacturing 30%

Navigational, Measuring, 

Electromedical, and Control 

Instruments Manufacturing 

34%

Covered Transactions from the Computer and Electronic Products Subsector 
7

Aerospace product and parts manufacturing accounted for 70 percent (16 notices) of the 23 

notices in the transportation equipment subsector from 2009 through 2011, up slightly from 67 

percent of notices in this subsector filed from 2008 through 2010. Motor vehicle parts 

manufacturing accounted for an additional 22 percent (five notices) of the notices in this 

subsector, up from 10 percent from 2008 through 2010. Ship and boat building accounted for 

nine percent (two notices), down from 24 percent from 2008 through 2010. 

Transportation Equipment 

2009-2011 NAICS Code Number of Notices 

% of Total 

Transportation 

Equipment5

Aerospace Product and Parts Manufacturing 3364 16 70% 

Motor Vehicle Parts Manufacturing 3363 5 22% 

Ship and Boat Building 3366 2 9% 

Table I-5: Covered Transactions from the Transportation Equipment Subsector 

Covered Transactions from the Transportation Equipment Subsector 

 

5

 Percentages do not sum to 100 percent due to rounding.

Transportation Equipment

2009-2011

Aerospace Product 

and Parts Manufacturing

70%

Motor Vehicle Parts 

Manufacturing 22%

Ship and Boat Building

9%
8 

The finance, information, and services sector (“FIS”) accounted for 35 percent (95 notices) of all 

notices filed with CFIUS from 2009 through 2011. The professional, scientific, and technical 

services subsector accounted for 55 percent (52 notices) of the 95 notices in this sector during 

the period, down slightly from 58 percent of FIS notices filed from 2008 through 2010.6

 

Publishing industries (except Internet) accounted for 19 percent (18 notices) of the notices in 

this sector – all of which involved software publishers (NAICS code 5112) – up from 14 percent 

of FIS notices filed from 2008 through 2010. Telecommunications accounted for 16 percent (15 

notices), up slightly from 15 percent of FIS notices filed from 2008 through 2010. Administrative 

and support staff accounted for five percent (five notices).

Finance, Information, and Services 

2009-2011 

NAICS 

Code(s) 

Number of 

Notices 

% of Total 

Finance, 

Information, and 

Services 

Professional, Scientific, and Technical Services 541 52 55% 

Publishing Industries (except Internet) 511 18 19% 

Telecommunications 517 15 16% 

Administrative and Support Staff 561 5 5% 

Securities, Commodities Contracts, and Other 

Financial Investments and Related Activities 523 3 3% 

Credit Intermediation and Related Activities 522 1 1% 

Waste Management and Remediation Services 562 1 1% 

Table I-6: Covered Transactions from the Finance, Information, and Services Sector 

Finance, Information, and Services 

2009-2011

Professional, Scientific, and 

Technical Services

55%

Publishing Industries (except 

Internet)

19%

Telecommunications

16%

Administrative and Support 

Staff

5%

Securities, Commodities 

Contracts, and Other 

Financial Investments and 

Related Activities

3%

Credit Intermediation and 

Related Activities

1%

Waste Management and 

Remediation Services

1%

Covered Transactions from the Finance, Information, and Services Sector 

 

6

 FIS subsectors in this Annual Report are identified at the 3-digit NAICS code level. The CY2010 Annual Report 

identified FIS subsectors at the 2-digit NAICS code level. FIS subsector percentages from the 2008-2010 period 

were recomputed at the 3-digit NAICS code level to allow for comparisons. 
9

Computer systems design and related services accounted for 44 percent (23 notices) of the 52 

notices in the professional, scientific, and technical services subsector from 2009 through 2011, 

up from 40 percent of notices in this subsector filed from 2008 through 2010. Architectural, 

engineering, and related services accounted for 27 percent (14 notices), down from 32 percent 

of notices in this subsector filed from 2008 through 2010. Management, scientific, and technical 

consulting services accounted for 15 percent (eight notices), and scientific research and 

development services accounted for 10 percent (five notices). Other professional, scientific, 

and technical services accounted for four percent (two notices). 

Professional, Scientific, and Technical 

Services 

2009-2011 

NAICS Code Number of 

Notices 

% of Total 

Professional, 

Scientific, and 

Technical 

Services 

Computer Systems Design and Related 

Services 5415 23 44% 

Architectural, Engineering, and Related 

Services 5413 14 27% 

Management, Scientific, and Technical 

Consulting Services 5416 8 15% 

Scientific Research and Development Services 5417 5 10% 

Other Professional, Scientific, and Technical 

Services 5419 2 4% 

Table I-7: Covered Transactions from the Professional, Scientific, and Technical Services 

Subsector 

Total Professional, Scientific, and Technical Services 

2009-2011

Computer Systems Design and 

Related Services

44%

Architectural, Engineering, and 

Related Services

27%

Management, Scientific, and 

Technical Consulting Services

15%

Scientific Research and 

Development Services

10%

Other Professional, Scientific, 

and Technical Services

4%

Covered Transactions from the Professional, Scientific, and Technical Services Subsector 
10 

Satellite telecommunications accounted for 40 percent (six notices) of the 15 notices in the 

telecommunications subsector from 2009 through 2011, up from 33 percent of the notices in this 

subsector filed from 2008 through 2010. Wireless telecommunications carriers (except satellite) 

accounted for 27 percent (four notices) in this subsector, down from 33 percent of the notices in 

this subsector filed from 2008 through 2010. Other telecommunications accounted for 20 

percent (three notices) and wired telecommunications carriers accounted for 13 percent (two 

notices) in this subsector. 

 

Telecommunications 

2009-2011 NAICS Code Number of Notices 

% of Total 

Telecommunications

Satellite Telecommunications 5174 6 40% 

Wireless Telecommunications Carriers 

(except Satellite) 5172 4 27% 

Other Telecommunications 5179 3 20% 

Wired Telecommunications Carriers 5171 2 13% 

Table I-8: Covered Transactions from the Telecommunications Subsector 

Covered Transactions from the Telecommunications Subsector 

Total Telecommunications

2009-2011

Satellite Telecommunications

40%

Wireless Telecommunications

Carriers (except Satellite)

27%

Other Telecommunications

20%

Wired Telecommunications 

Carriers

13%
11

The mining, utilities, and construction sector (“MUC”) accounted for 18 percent (48 notices) of 

all notices filed with CFIUS from 2009 through 2011. In this sector, the largest percentage of 

activity involved the utilities subsector, which accounted for 52 percent (25 notices) of the 

notices, up from 49 percent of MUC notices filed from 2008 through 2010. Support activities for 

mining accounted for 15 percent (seven notices) and mining (except oil and gas) accounted for 

13 percent (six notices) of the notices in this sector, down from 16 percent and 19 percent, 

respectively, of MUC notices filed from 2008 through 2010. 

Mining, Utilities, and Construction 

2009-2011 NAICS Code Number of Notices 

% of Total 

Mining, 

Utilities, and 

Construction 

Utilities 221 25 52% 

Support Activities for Mining 213 7 15% 

Mining (except Oil and Gas) 212 6 13% 

Oil and Gas Extraction 211 4 8% 

Heavy and Civil Engineering Construction 237 3 6% 

Specialty Trade Contractors 238 2 4% 

Construction of Buildings 236 1 2% 

Table I-9: Covered Transactions from the Mining, Utilities, and Construction Sector 

Covered Transactions from the Mining, Utilities, and Construction Sector 

Total Mining, Utilities, and Construction 

2009-2011

Utilities

52%

Support Activities for Mining

15%

Mining (except Oil and Gas)

13%

Oil and Gas Extraction

8%

Heavy and Civil Engineering 

Construction

6%

Specialty Trade Contractors

4%

Construction of Buildings

2%
12 

Electric power generation, transmission, and distribution accounted for 72 percent (18 notices) 

of the 25 notices in the utilities subsector from 2009 through 2011, down from 79 percent of 

notices filed in the utilities subsector from 2008 through 2010. Natural gas distribution 

accounted for 20 percent (five notices) and water, sewage, and other systems accounted for 

eight percent (two notices) of the notices in this subsector. 

Utilities 

2009-2011 NAICS Code Number of Notices 

% of Total 

Utilities 

Electric Power Generation, Transmission, and 

Distribution 2211 18 72% 

Natural Gas Distribution 2212 5 20% 

Water, Sewage, and Other Systems 2213 2 8% 

Table I-10: Covered Transactions from the Utilities Subsector 

Utilities 

2009-2011

Electric Power Generation, 

Transmission and 

Distribution 72%

Natural Gas Distribution 

20%

Water, Sewage, and Other 

Systems 8%

Covered Transactions from the Utilities Subsector 
13

The wholesale trade, retail trade, and transportation sector (“WRT”) accounted for seven 

percent (20 notices) of all notices of covered transactions filed with CFIUS from 2009 through 

2011. Support activities for transportation accounted for 30 percent (six notices) of the notices 

in this sector, down from 39 percent of WRT notices filed from 2008 through 2010. Merchant 

wholesalers of durable goods accounted for another 25 percent (five notices) of WRT notices, 

up from 11 percent of WRT notices filed from 2008 through 2010. 

Wholesale, Retail, and Transportation 

2009-2011 NAICS Code Number of Notices 

% of Total 

Wholesale, 

Retail, and 

Transportation 

Support Activities for Transportation 488 6 30% 

Merchant Wholesalers, Durable Goods 423 5 25% 

Electronic and Appliance Stores 443 2 10% 

Water Transportation 483 2 10% 

Pipeline Transportation 486 2 10% 

Merchant Wholesalers, Nondurables Goods 424 1 5% 

Air Transportation 481 1 5% 

Transit and Ground Passenger Transportation 485 1 5% 

Table I-11: Covered Transactions from the Wholesale, Retail, and Transportation Sector 

Total Wholesale, Retail, and Transportation 2009-2011

Support Activities for 

Transportation

30%

Merchant Wholesalers, 

Durable Goods

25%

Electronics and Appliance 

Stores

10%

Water Transportation

10%

Pipeline Transportation

10%

Merchant Wholesalers, 

Nondurable Goods

5%

Air Transportation

5%

Transit and Ground 

Passenger Transportation

5%

Covered Transactions from the Wholesale, Retail, and Transportation Sector 
14 

2. Covered Transactions by Country or Economy: 2009-2011 

Table I-12 breaks down the notices of covered transactions from 2009 through 2011 by country 

or economy and year.7

 Acquisitions by investors from the United Kingdom accounted for 26 

percent of the notices, the largest by far, for the three-year period (69 notices, including one 

notice from an acquirer with UK and German owners), down slightly from 29 percent of all 

notices for the 2008-2010 period. UK investors also represented the largest number of notices 

in each individual year. Investors from Canada and France accounted for an additional 10 

percent each over the period (27 notices each), an increase from about eight percent each in 

the 2008-2010 period. Investors from China accounted for seven percent of the notices for the 

period (20 notices), up from five percent for 2008-2010, with the number of notices filed by 

Chinese acquirers growing each year. Investors from Israel and Japan accounted for more than 

six percent each over the three-year period (18 notices each). 

Table I-13 shows a few relative concentrations of transactions in specific industry sectors. 

Eighteen of the 27 investments from France (67 percent) were in manufacturing, with no other 

sector accounting for more than four transactions. Twelve of the 20 investments from China (60 

percent) were in manufacturing, with no other sector accounting for more than five transactions. 

Eight of the 14 investments from the Netherlands (57 percent) were in finance, information, and 

services, with no other sector accounting for more than two transactions. Investments from 

Canada were concentrated in mining, utilities, and construction (14 of 27 notices, or 52 percent) 

and finance, information, and services (10 of 27 notices, or 37 percent). Investors from 

countries or economies that had more than three notices typically invested in multiple sectors. 

 

7

 The figures in this table reflect the number of notices filed with CFIUS and are not adjusted to account for the fact 

that some transactions were the subject of more than one notice, where the original notice was withdrawn and then 

re-filed, as discussed in Section I.D of this Annual Report. 
15

Covered Transactions by Acquirer Home Country/Economy, 2009-2011 

Country/Economy 2009 2010 2011 Total 

Australia 1 3 4 8 

Bermuda 1 1 

Brazil 1 1 

Canada 9 9 9 27 

Cayman Islands 1 1 

Chile 1 1 

China 4 6 10 20 

Estonia 1 1 

Finland 1 1 2 

France 7 6 14 27 

Germany 1 2 3 6 

Hong Kong 1 1 2 

India 1 1 2 

Israel 5 7 6 18 

Italy 2 3 2 7 

Japan 4 7 7 18 

Korea 1 1 

Kuwait 2 2 

Malaysia 1 1 2 

Netherlands 5 2 7 14 

New Zealand 1 1 

Norway 2 2 

Qatar 1 1 

Russian Federation 4 4 

Singapore 1 2 3 

Spain 3 4 7 

Sweden 3 5 6 14 

Switzerland 2 1 3 

Taiwan 1 1 

United Arab Emirates 2 1 3 

United Kingdom 17 26 25 68 

United Kingdom & 

Germany 1 1 

Grand Total 65 93 111 269 

Table I-12: Covered Transactions by Country or Economy: 2009-2011 
16 

Covered Transactions by Acquirer Home Country/Economy and Target Sector, 2009-2011 

Country/Economy Manufacturing 

Finance, 

Information, 

and Services

Mining, Utilities, 

and 

Construction 

Wholesale, 

Retail, and 

Transportation 

Total 

Australia 1 2 2 3 8 

Bermuda 1 1 

Brazil 1 1 

Canada 1 10 14 2 27 

Cayman Islands 1 1 

Chile 1 1 

China 12 3 5 20 

Estonia 1 1 

Finland 2 2 

France 18 1 4 4 27 

Germany 2 4 6 

Hong Kong 2 2 

India 1 1 2 

Israel 6 10 2 18 

Italy 5 2 7 

Japan 8 6 3 1 18 

Korea 1 1 

Kuwait 2 2 

Malaysia 1 1 2 

Netherlands 2 8 2 2 14 

New Zealand 1 1 

Norway 1 1 2 

Qatar 1 1 

Russian Federation 2 1 1 4 

Singapore 3 3 

Spain 5 2 7 

Sweden 5 9 14 

Switzerland 3 3 

Taiwan 1 1 

United Arab Emirates 3 3 

United Kingdom 32 28 5 3 68 

United Kingdom & Germany 1 1 

Grand Total 106 95 48 20 269 

 Table I-13: Covered Transactions by Country or Economy and Target Sector: 2009-2011
17

D. Withdrawn Notices 

Parties can withdraw an accepted notice of a transaction if the Committee approves a written 

request for withdrawal from the parties. Parties have requested withdrawals for a number of 

reasons over the years. For example, in some cases, parties are unable to address all of the 

Committee’s outstanding national security concerns within the initial 30-day review period or 45-

day investigation period. The parties might then choose to submit a request for withdrawal 

because, for example, a material change in the terms of the transaction warrants the filing of a 

new notice, the parties are abandoning the transaction (for commercial reasons or in light of a 

CFIUS determination to recommend that the President suspend or prohibit the transaction), or 

to provide additional time to answer remaining questions or to resolve remaining national 

security concerns. When appropriate, the Committee has established processes to track the 

status of a withdrawn transaction or interim protections to address specific national security 

concerns identified during the review or investigation of the withdrawn transaction. 

In 2011, CFIUS approved the withdrawal of six notices. The parties withdrew one notice during 

the 30-day review period and five during the 45-day investigation period. In four cases, parties 

re-filed in 2011, and CFIUS concluded action in those cases. In two cases, the parties re-filed 

in 2012. 
18 

E. Mitigation Measures 

From 2009 through 2011, 22 cases (eight percent) resulted in the use of legally binding 

mitigation measures. In 2011, CFIUS agencies negotiated, and parties adopted, mitigation 

measures for eight different covered transactions (seven percent). These measures involved 

acquisitions of U.S. companies engaged in software, computer programming, computer and 

electronic manufacturing, electrical equipment and component manufacturing, aerospace 

manufacturing, and finance. Five CFIUS agencies served as the U.S. Government (USG) 

signatories to these measures. 

The Committee has adopted procedures to evaluate and ensure that parties to a covered 

transaction remain in compliance with any risk mitigation measure under section 721 that 

CFIUS negotiates with or imposes on the parties. For all mitigation measures executed since 

FINSA became effective, Treasury, as Chair of CFIUS, has designated each USG signatory to a 

mitigation measure as a lead agency for monitoring compliance with that measure. Lead 

agencies carry out their monitoring responsibilities on behalf of the Committee and report back 

to the Committee on at least a quarterly basis. In addition, signatories to mitigation measures 

that were entered into before FINSA’s effective date also report to CFIUS quarterly on 

compliance with those measures. As described below, all lead agencies for monitoring 

mitigation compliance have implemented processes to carry out their responsibilities. 

Mitigation measures negotiated and adopted in 2011 required the businesses involved to take 

specific and verifiable actions, including, for example: 

o establishing a Corporate Security Committee, security officers, and other 

mechanisms to ensure compliance with all required actions, including annual reports 

and independent audits. 

o ensuring compliance with established guidelines and terms for handling existing or 

future USG contracts and USG customer information. 

o ensuring only U.S. persons handle certain products and services, and ensuring that 

certain activities and products are located only in the United States. 

o notifying relevant USG parties in advance of foreign national visits to the U.S. 

business. 

o notifying relevant USG parties of any material introduction, modification, or 

discontinuation of a product or service, as well as any awareness of any vulnerability 

or security incidents. 

o ensuring continued production of certain products for relevant USG parties for 

specified periods. 

o requiring a proxy entity to perform certain functions and activities of the U.S. 

business. 

CFIUS agencies use a variety of means to monitor and enforce compliance by the companies 

that are subject to the measures, including: 

o periodic reporting to USG agencies by the companies; 

o on-site compliance reviews by USG agencies; 

o third-party audits when provided for by the terms of the mitigation measures; 

o investigations and remedial actions if anomalies or breaches are discovered or 

suspected. 

In light of the number and complexity of mitigation measures implemented to date, individual 

CFIUS agencies monitor compliance through a number of internal procedures, including: 
19

o assigning staff responsibilities for the monitoring of compliance; 

o designing tracking systems to monitor required reports; 

o instituting internal instructions and procedures to ensure that in-house expertise is 

drawn upon to analyze compliance with measures. 
20 

F. Perceived Adverse Effects of Covered Transactions 

Section 721(m) requires that this Annual Report include a discussion of all perceived adverse 

effects of covered transactions on the national security or critical infrastructure of the United 

States that the Committee will take into account in its deliberations during the period before 

delivery of the next report, to the extent possible. In reviewing a covered transaction, CFIUS 

evaluates all relevant national security considerations identified by its members during the 

review and does not conclude action on a covered transaction if there are unresolved national 

security concerns. 

As discussed in the Guidance Concerning the National Security Review Conducted by CFIUS, 

which CFIUS published in the Federal Register on December 8, 2008, the transactions that 

CFIUS had thus far reviewed presented a broad range of national security considerations. 

CFIUS examines the national security considerations to determine whether, in light of the 

specific facts and circumstances related to the transaction, the transaction would adversely 

affect national security and pose a national security risk. Among the considerations presented 

by transactions reviewed by CFIUS are the following: 

 Foreign control of U.S. businesses that: 

o Provide products and services to an agency or agencies of the U.S. Government, 

or state and local authorities, that have functions that are relevant to national 

security. 

o Provide products or services that could expose national security vulnerabilities, 

including potential cyber security concerns, or create vulnerability to sabotage or 

espionage. This includes consideration of whether the covered transaction will 

increase the risk of exploitation of the particular U.S. business’s position in the 

supply chain. 

o Have operations, or produce or supply products or services, the security of which 

may have implications for U.S. national security, such as businesses that involve 

infrastructure that may constitute critical infrastructure; businesses that involve 

various aspects of energy production, including extraction, generation, 

transmission, and distribution; businesses that affect the national transportation 

system; and businesses that could significantly and directly affect the U.S. 

financial system. 

o Have access to classified information or sensitive government or government 

contract information, including information about employees. 

o Are in the defense, security, and national security-related law enforcement 

sectors. 

o Are involved in activities related to weapons and munitions manufacturing, 

aerospace, satellite, and radar systems. 

o Produce certain types of advanced technologies that may be useful in defending, 

or in seeking to impair, U.S. national security, which may include businesses 

engaged in the design and production of semiconductors and other equipment or 

components that have both commercial and military applications, or the design, 

production, or provision of goods and services involving network and data 

security. 

o Engage in the research and development, production, or sale of technology, 

goods, software, or services that are subject to U.S. export controls. 

o Are in proximity to certain types of USG facilities. 
21

 Acquisition of control by foreign persons that: 

o Are controlled by a foreign government. 

o Are from a country with a record on nonproliferation and other national securityrelated matters that raises concerns. 

o Have historical records of taking or intentions to take actions that could impair 

U.S. national security. 

CFIUS reviews all relevant national security considerations and the particular facts and 

circumstances of transactions to determine whether the transaction will pose a national security 

risk. Among the factors that CFIUS takes into account are the following, listed in section 721(f) 

of the Defense Production Act of 1950: 

(1) domestic production needed for projected national defense requirements; 

(2) the capability and capacity of domestic industries to meet national defense 

requirements, including the availability of human resources, products, technology, 

materials, and other supplies and services; 

(3) the control of domestic industries and commercial activity by foreign citizens as it affects 

the capability and capacity of the United States to meet the requirements of national 

security; 

(4) the potential effects of the proposed or pending transaction on sales of military goods, 

equipment, or technology to any country – 

(A) identified by the Secretary of State - 

(i) under section 6(j) of the Export Administration Act of 1979, as a country 

that supports terrorism; 

(ii) under section 6(l) of the Export Administration Act of 1979, as a country 

of concern regarding missile proliferation; or 

(iii) under section 6(m) of the Export Administration Act of 1979, as a country 

of concern regarding the proliferation of chemical and biological weapons; 

(B) identified by the Secretary of Defense as posing a potential regional military 

threat to the interests of the United States; or 

(C) listed under section 309(c) of the Nuclear Non-Proliferation Act of 1978 on the 

“Nuclear Non-Proliferation-Special Country List” (15 C.F.R. Part 778, Supplement 

No. 4) or any successor list; 

(5) the potential effects of the proposed or pending transaction on United States 

international technological leadership in areas affecting United States national security; 

(6) the potential national security-related effects on United States critical infrastructure, 

including major energy assets; 

(7) the potential national security-related effects on United States critical technologies; 

(8) whether the covered transaction is a foreign government-controlled transaction, as 

determined under subsection (b)(1)(B) of section 721; 

(9) as appropriate, and particularly with respect to transactions requiring an investigation 

under subsection (b)(1)(B) of section 721, a review of the current assessment of— 

(A) the adherence of the subject country to nonproliferation control regimes, 

including treaties and multilateral supply guidelines, which shall draw on, but not 

be limited to, the annual report on “Adherence to and Compliance with Arms 

Control, Nonproliferation and Disarmament Agreements and Commitments,” 

required by section 403 of the Arms Control and Disarmament Act; 

(B) the relationship of such country with the United States, specifically on its record 

on cooperating in counter-terrorism efforts, which shall draw on, but not be 

limited to, the report of the President to Congress under section 7120 of the 

Intelligence Reform and Terrorism Prevention Act of 2004; and 
22 

(C) the potential for transshipment or diversion of technologies with military 

applications, including an analysis of national export control laws and regulations; 

(10) the long-term projection of United States requirements for sources of energy and other 

critical resources and materials; and 

(11) such other factors as the President or the Committee may determine to be appropriate 

generally or in connection with a specific review or investigation. 

In the transactions that CFIUS will review during the next reporting period, it will continue to take 

into account the national security considerations noted above. CFIUS will consider whether the 

transactions may have the above-listed or any other adverse effects in determining whether the 

transactions pose national security risk. 
23

SECTION II: CRITICAL TECHNOLOGIES

Introduction 

This section of the Annual Report to Congress has been prepared in accordance with section 

721(m)(3) of the Defense Production Act of 1950 (50 U.S.C. App. 2170(m)(3)), as amended. 

Section 721(m)(3) requires the annual report to include: 

“(i) an evaluation of whether there is credible evidence of a coordinated strategy by one 

or more countries or companies to acquire United States companies involved in 

research, development, or production of critical technologies for which the United States 

is a leading producer; and 

“(ii) an evaluation of whether there are industrial espionage activities directed or directly 

assisted by foreign governments against private United States companies aimed at 

obtaining commercial secrets related to critical technologies.” 

Subsection II.A addresses the requirement laid out in (i), and subsection II.B addresses the 

requirement laid out in (ii). 

Definitions and Methodologies

The definition of “critical technologies,” which includes technologies subject to certain U.S. 

export controls, is set forth in 31 C.F.R. § 800.209, Regulations Pertaining to Mergers, 

Acquisitions, and Takeovers by Foreign Persons, published in the Federal Register on 

November 21, 2008. See the Appendix for this definition. “Critical technology companies” are 

U.S. companies that CFIUS identified for this section of the Annual Report that are involved in 

research, development, or production of critical technologies. The Appendix also provides the 

definition of “coordinated strategy” for purposes of this section of the Annual Report, describes 

the methodology and data sources used to identify transactions involving critical technology 

companies (“critical technology transactions”), and the approach used to conduct the analyses 

required by section 721 related to critical technologies. Finally, the Appendix lists the agencies 

and other entities that participated in preparing this section of the Annual Report. 

A. Whether There Is Credible Evidence of a Coordinated Strategy 

 to Acquire Critical Technology Companies 

1. Key Finding 

Based on its assessment of transactions identified by CFIUS for purposes of this report, the 

U.S. Intelligence Community (“USIC”) judges with moderate confidence that there is likely a 

coordinated strategy among one or more foreign governments or companies to acquire U.S. 

companies involved in research, development, or production of critical technologies for which 

the United States is a leading producer. Information supporting this assessment is provided in 

the classified version of this report. Indications of other coordinated strategies may go 

unobserved due to limitations on intelligence collection, or may be hidden or misconstrued 

because of foreign denial and deception activities. 
24 

2. Summary of Foreign M&A of U.S. Critical Technology Companies 

Using the methodology described in the Appendix, CFIUS identified 114 planned or completed 

foreign mergers with, or acquisitions of, U.S. critical technology companies involving acquirers 

from 33 countries and economies. CFIUS agencies and the USIC evaluated all 114 

transactions for indications of a coordinated strategy to acquire U.S. critical technologies.

3. Frequency of Activity by Countries/Economies and Companies 

Table II-18

 lists the originating countries or economies for planned and completed critical 

technology transactions in 2011: 

Country/

Economy

Number of 

Transactions

United Kingdom 30

France 13

Japan 8

Canada 7

Netherlands 7

Germany 6

Israel 5

Switzerland 5

China 4

Singapore 4

Australia 3

Sweden 3

Finland 2

India 2

Norway 2

Spain 2

Austria 1

Belgium 1

Brazil 1

British Virgin Islands 1

Czech Republic 1

Denmark 1

Egypt 1

Hong Kong 1

Hungary 1

Italy 1

Luxembourg 1

Mexico 1

Oman 1

Poland 1

Russia 1

South Africa 1

Thailand 1

Table II-1: Home Country or Economy 

of Foreign Acquirers of U.S. Critical Technology Companies 

 

8

 The number of transactions based on country/economy involvement exceeds the total number of transactions (114) 

due to some transactions involving more than one country/economy. 
25

As shown in Figure II-1, the largest amount of merger and acquisition activity involving foreign 

acquisitions of U.S. critical technology companies involved targets whose primary activities are 

in the machinery and equipment sector. 

4

7

22

26

34

2 4

10

5

0

5

10

15

20

25

30

35

40

Aerospace

& Defense

Chemicals

Electronics

Information

Technology

Machinery &

Equipment

Metals &

Mining

Pharma &

Biotech

Professional

& Technical

Services

Wholesale &

Retail

Number of 2011 Critical Technology 

Transactions

 Figure II-1: Sectors of U.S. Critical Technology Companies Acquired in 2011 

The data in this section of the Annual Report can also be analyzed by the home region of the 

foreign acquirers. Figure II-29

 displays the data with the following regional breakdown: Europe 

(excluding Russia); East Asia; Canada, Australia & New Zealand; Middle East & North Africa; 

and Other. Seventy-seven transactions involved an investor in Europe (excluding Russia). 

77

17

10 7 6

0

10

20

30

40

50

60

70

80

90

Europe

(excluding

Russia)

East Asia Canada,

Australia &

New Zealand

Middle East &

North Africa

Other

Number of 2011 Critical Technology Transactions

 Figure II-2: 2011 Critical Technology Transactions by Region of Foreign Acquirer 

 

9

 The number of transactions based on country/economy involvement exceeds the total number of transactions (114) 

due to some transactions involving more than one country/economy. 
26 

Figure II-310 shows the regional breakdown of activity by number of transactions in each sector. 

European (excluding Russian) investors were the most active acquirers of U.S. critical 

technology companies in all of the identified sectors except metals and mining. 

3

4

18

16

26

2

4 4

1 1

6

5

3

1

4

2

1 1

2

1 1

2 2

1

2

1

2

1

0

5

10

15

20

25

30

Aerospace &

DefenseChemicals

Electronics

InformationTechnology

Machinery &

Equipment

Metals & Mining

Pharma &

Biotech

Professional &

Technical

Services

Wholesale &

Retail

Number of 2011 Critical Technology Transactions

Europe (excluding Russia) East Asia

Canada, Australia & New Zealand Middle East & North Africa

Other

 Figure II-3: 2011 Critical Technology Transactions by Region Within Each Sector 

 

10 The number of transactions based on country/economy involvement exceeds the total number of transactions (114) 

due to some transactions involving more than one country/economy.
27

B. Whether Foreign Governments Used Espionage Activities to 

 Obtain Commercial Secrets Related to Critical Technologies 

1. Key Finding 

The USIC judges that foreign governments are extremely likely to continue to use a range of 

collection methods to obtain U.S. critical technologies. 
28 

SECTION III: FOREIGN DIRECT INVESTMENT IN THE UNITED STATES 

BY COUNTRIES THAT BOYCOTT ISRAEL

OR DO NOT BAN TERRORIST ORGANIZATIONS

Introduction 

This section of the CFIUS Annual Report to Congress has been prepared in accordance with 

section 7(c) of FINSA, which provides: 

“(1) STUDY REQUIRED.—Before the end of the 120-day period beginning on the date 

of enactment of this Act and annually thereafter, the Secretary of the Treasury, in 

consultation with the Secretary of State and the Secretary of Commerce, shall conduct a 

study on foreign direct investments in the United States, especially investments in critical 

infrastructure and industries affecting national security, by— 

(A) foreign governments, entities controlled by or acting on behalf of a foreign 

government, or persons of foreign countries which comply with any boycott of 

Israel; or 

(B) foreign governments, entities controlled by or acting on behalf of a foreign 

government, or persons of foreign countries which do not ban organizations 

designated by the Secretary of State as foreign terrorist organizations. 

“(2) REPORT.—Before the end of the 30-day period beginning upon the date of 

completion of each study under paragraph (1) and thereafter in each annual report under 

section 721(m) of the Defense Production Act of 1950 (as added by this section), the 

Secretary of the Treasury shall submit a report to Congress, for transmittal to all 

appropriate committees of the Senate and the House of Representatives, containing the 

findings and conclusions of the Secretary with respect to the study described in 

paragraph (1), together with an analysis of the effects of such investment on the national 

security of the United States and on any efforts to address those effects.” 

A. Summary of Findings and Conclusions 

 Mergers with and acquisitions of U.S. companies (“M&A”), the main form of foreign direct 

investment (“FDI”) into the United States, by investors from the countries described in 

section 7(c)(1) of FINSA that were completed between January 1, 2011, and December 

31, 2011 (“CY 2011”) (“subject M&A transactions”), represent a small percentage of the 

total of such FDI flows into the United States. 

 The value of subject M&A transactions with publicly reported values was $682.25 million. 

(As described in subsection III.C, not all publicly announced transactions are reported 

with dollar values, so the actual value of subject M&A transactions is over $682.25 

million.) The total value of M&A transactions with publicly reported values by all foreign 

investors during CY 2011 exceeded $184 billion. 

 The subject M&A transactions spanned a number of economic sectors. 

 CFIUS considered each subject M&A transaction through procedures that CFIUS 

agencies have put in place for transactions that are not notified to CFIUS.
29

B. Study Methodology 

1. Identification of Relevant Countries 

To identify relevant countries that comply with any boycott of Israel, as required by the statute, 

CFIUS considered the lists published by the Treasury Department in 2011 pursuant to section 

999 of the Internal Revenue Code and the countries identified by the Department of State in 

reporting to Congress during 2011 under section 564 of the Foreign Relations Authorization Act, 

FY 1994-95, as well as information about the countries’ observance of a primary boycott of 

Israel. Based on these considerations, CFIUS interprets the reporting requirement under 

section 7(c)(1)(A) of FINSA to apply to the following countries:11 Algeria, Iran, Kuwait, Lebanon, 

Libya, Qatar, Saudi Arabia, Sudan, Syria, the United Arab Emirates, and Yemen. 

To identify relevant countries that do not ban foreign terrorist organizations, CFIUS interpreted 

section 7(c)(1)(B) of FINSA to apply to countries that were certified in 2011 as “not cooperating 

fully with United States antiterrorism efforts,” pursuant to section 40A of the Arms Export Control 

Act, as amended. Those countries are Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela. 

(The same countries received this certification last year.) 

2. Scope of FDI 

Mergers with and acquisitions of U.S. companies are the main form of FDI into the United 

States and the form of FDI that CFIUS is authorized under section 721 to review. This section 

of the Annual Report considers the following transactions: (i) transactions notified to CFIUS 

under section 721; (ii) M&A transactions that were not notified to CFIUS (non-notified 

transactions) that CFIUS agencies considered through procedures that each agency has 

adopted for this purpose; and (iii) those M&A transactions that resulted in an ownership stake in 

a U.S. company of at least 10 percent,12 as listed in the Thomson ONE and S&P Capital IQ 

databases, two recognized commercial/financial databases. 

 Thomson ONE database: This database is a product of Thomson Reuters. The 

information on transactions provided in the database includes the date of the 

transaction, the respective countries of origin of the acquirer and the target company, 

and the sector of the target company. In most cases, the database provides the 

transaction value and the percentage of ownership rights acquired through the 

transaction and, in some cases, the acquirer’s total ownership stake after the 

transaction. The transactions considered for this section of the Annual Report excluded 

those that the Thomson ONE database shows resulted in an ownership stake in a U.S. 

company of less than 10 percent, where data on the interest acquired was available. 

 S&P Capital IQ database: This database is a Standard and Poor’s business that 

provides detailed profiles of M&A, private equity, venture capital, spin-offs, initial public 

offerings, bankruptcies, share buyback programs, and equity/debt public offering 

 

11 Iraq is not included on this CY 2011 list. However, Iraq was added to the “List of Countries Requiring Cooperation 

With an International Boycott” published by the Treasury Department on August 17, 2012, pursuant to section 999 of 

the Internal Revenue Code. 

12 FDI is generally understood to imply ownership of at least 10 percent, a benchmark used by many statistical 

agencies around the world, including the Department of Commerce’s Bureau of Economic Analysis, the Council of 

Economic Advisors (Economic Report of the President), the International Monetary Fund, and the Organization for 

Economic Cooperation and Development. As noted in the descriptions of the Thomson ONE and S&P Capital IQ 

databases, these information sources did not always provide information regarding the acquirer’s total ownership 

stake in the U.S. company after the transaction. Therefore, some of the transactions covered by this review may be 

portfolio investments rather than FDI. 
30 

transactions. The information on transactions provided in the database includes the 

date of the transaction, the respective countries of origin of the acquirer and the target 

company, and the sector of the target company. In most cases, the database provides 

the transaction value and the percentage of ownership rights acquired through the 

transaction and, in some cases, the acquirer’s total ownership stake after the 

transaction. The transactions considered for this section of the Annual Report excluded 

those that the S&P Capital IQ database shows resulted in an ownership stake in a U.S. 

company of less than 10 percent, where data on the interest acquired was available. 

C. Detailed Findings 

1. Identification of the Subject M&A Transactions 

The study identified 12 completed M&A transactions in CY 2011 by investors from countries that 

comply with any boycott of Israel. These transactions involved investors from Kuwait, Lebanon, 

Saudi Arabia, and the United Arab Emirates. 

The study did not find any subject M&A transactions by investors from Cuba, Iran, or Syria, 

which are countries that do not cooperate fully with U.S. antiterrorism efforts and which were 

subject to stringent economic sanctions during the relevant period. There also were no subject 

M&A transactions by investors from Eritrea, North Korea, or Venezuela — three countries that 

were also designated as not cooperating fully with U.S. antiterrorism efforts. 

The combined value of the eight identified transactions with reported values is approximately 

$682.25 million. Thomson ONE and S&P Capital IQ report M&A transaction value only in those 

cases in which the companies announce the value publicly. Thomson ONE and S&P Capital IQ 

did not report, and Treasury staff was unable to determine independently, values for four of the 

12 transactions analyzed in this section of the Annual Report. The value of the 12 total 

transactions, therefore, is necessarily greater than $682.25 million. Figure III-1 shows the 

number and aggregate value of the transactions for each of the relevant countries: 

Subject M&A Transactions by Country

United 

Arab 

Emirates

33%

Saudi 

Arabia

33%

Kuwait

17%

Lebanon

17%

Figure III-1: Total Transactions by Country of Acquirer 

Country Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

United Arab 

Emirates 4 $62.53 

Saudi Arabia 4 $302.45

Kuwait 2 $317.27 

Lebanon 2 n/a

Total 12 $682.25 
31

The subject M&A transactions span several major sectors of the economy. Figure III-2 shows 

the industries represented by the 12 transactions, noting both the number and value of 

transactions for each sector. Transactions in the information technology sector – the largest 

category represented – include transactions in the software, telecommunications, and data 

processing and hosting industries. 

Subject M&A Transactions by Target 

Sector

Information 

Technology

34%

Professional, 

Scientific, and 

Technical 

Services

17%

Retail Trade

8%

Publishing

8%

Hotel

8%

Manufacturing

25%

Figure III-2: Economic Sectors of U.S. Companies Acquired 

2. National Security Effects of the Subject M&A Transactions 

Each of the 12 subject M&A transactions was considered as part of the non-notified transaction 

procedures of CFIUS and CFIUS agencies. Pursuant to these procedures, CFIUS agencies 

monitor M&A activity, identify transactions that have not been voluntarily notified to CFIUS but 

may present national security considerations, and assess whether additional information 

regarding the transaction or the authority of section 721 is required to identify or address any 

national security concerns. 

When a CFIUS agency believes that a non-notified transaction may be a covered transaction 

and may raise national security considerations, the agency may self-initiate a review of the 

transaction under section 721. Alternatively, if CFIUS believes that the transaction may raise 

national security considerations and may be a covered transaction, CFIUS may contact the 

parties and request further information about the transaction, partly to help determine whether 

the transaction is a covered transaction. If CFIUS makes such a determination, it may request 

that the parties file a notice. In most cases in which CFIUS has made inquiries of parties to 

transactions, the parties have responded by filing a voluntary notice. Consideration by CFIUS 

agencies of the subject M&A transactions so far has not resulted in requests for further 

information from or filings by the parties to the transactions. 

Sector Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

Information 

Technology 4 $300.25

Manufacturing 3 $50.80

Professional, 

Scientific, and 

Technical Services 

2 $14.00

Retail Trade 1 $2.20

Hotels 1 $315.00

Publishing 1 n/a

Total 12 $682.25
32 

APPENDIX

A. Definition of “Critical Technologies” 

The Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons (the 

“CFIUS regulations”), published in the Federal Register on November 21, 2008, and codified at 

31 C.F.R. part 800, defines “critical technologies” with reference to U.S. export control 

regulations, which were determined to be the most reliable and accurate means of identifying 

critical technologies: 

“§800.209 Critical technologies. 

The term critical technologies means: 

(a) Defense articles or defense services covered by the United States Munitions List 

(USML), which is set forth in the International Traffic in Arms Regulations (ITAR) (22 

C.F.R. parts 120-130); 

(b) Those items specified on the Commerce Control List (CCL) set forth in Supplement No. 

1 to part 774 of the Export Administration Regulations (EAR) (15 C.F.R. parts 730-774) 

that are controlled pursuant to multilateral regimes (i.e., for reasons of national security, 

chemical and biological weapons proliferation, nuclear nonproliferation, or missile 

technology), as well as those that are controlled for reasons of regional stability or 

surreptitious listening; 

(c) Specially designed and prepared nuclear equipment, parts and components, materials, 

software, and technology specified in the Assistance to Foreign Atomic Energy Activities 

regulations (10 C.F.R. part 810), and nuclear facilities, equipment, and material specified 

in the Export and Import of Nuclear Equipment and Materials regulations (10 C.F.R. part 

110); and 

(d) Select agents and toxins specified in the Select Agents and Toxins regulations (7 C.F.R. 

part 331, 9 C.F.R. part 121, and 42 C.F.R. part 73).” 

B. Methodology and Data Sources Used to Identify U.S. Critical Technology Companies 

Acquired by Foreigners 

The definition of critical technologies used in the CFIUS regulations is specific to those 

regulations. There is no single source that lists all U.S. critical technology companies acquired 

by foreign persons. Therefore, for purposes of Section II of the Annual Report, CFIUS agencies 

responsible for administering U.S. export control regulations used a combination of publicly 

available information, non-public data on M&A transactions that CFIUS reviewed, and their own 

internal records to identify the U.S. critical technology companies that were acquired by or 

received significant investments from foreign investors in 2011. The specific data sources and 

methodology used varied, depending on the records maintained pursuant to the particular 

export control regulations that pertain to the different critical technology categories. The dataset 

used for Section II of this Annual Report is therefore limited. The various methodologies are 

described below. 

31 C.F.R. § 800.209(a): This paragraph pertains to defense articles or defense services 

covered by the United States Munitions List (USML), which is set forth in the 

International Traffic in Arms Regulations (ITAR) (22 C.F.R. parts 120-130). 

Under the provisions of the ITAR, the Department of State maintains a robust registration, 

licensing, and compliance process for any person, whether U.S. or foreign, involved in the 

export or temporary import of a defense article or defense service controlled by the ITAR. This 
33

approach assists in the identification of foreign acquisitions of U.S. critical technology 

companies that produce defense articles or services covered under the ITAR. 

31 C.F.R. § 800.209(b): This paragraph pertains to those items specified on the 

Department of Commerce’s Control List (CCL), which is set forth in Supplement No. 1 to 

part 774 of the Export Administration Regulations (EAR) (15 C.F.R. parts 730-774). The 

items on the CCL are controlled pursuant to multilateral regimes (i.e., for reasons of 

national security, chemical and biological weapons proliferation, nuclear nonproliferation, 

or missile technology) as well as for reasons of regional stability or surreptitious 

listening.

Firms producing items under the regulations specified in this paragraph of 31 C.F.R. § 800.209 

are not required to register with the Department of Commerce (Commerce), but, in many cases, 

must obtain a license from Commerce in order to export those items (including “deemed 

exports” to foreign nationals in the United States). To identify acquisitions of companies 

producing items that fall under this part of the definition, Commerce used a combination of 

publicly available information on M&A transactions,13 information on non-publicly announced 

M&A transactions notified to CFIUS, and its internal records of export license applications. 

31 CFR § 800.209(c): This paragraph pertains to specially designed and prepared 

nuclear equipment, parts and components, materials, software, and technology specified 

in the Assistance to Foreign Atomic Energy Activities regulations (10 C.F.R. part 810), 

and nuclear facilities, equipment, and material specified in the Export and Import of 

Nuclear Equipment and Materials regulations (10 C.F.R. part 110). 

The Department of Energy used a similar approach to that adopted by Commerce, which 

entailed checking a list of publicly announced M&A transactions14 against its records of export 

authorizations under 10 C.F.R. part 810 and the Nuclear Regulatory Commission’s records of 

export license requests under 10 C.F.R. part 110. 

31 C.F.R. § 800.209(d): This paragraph pertains to select agents and toxins specified in 

the Select Agents and Toxins regulations (7 C.F.R. part 331, 9 CFR 

part 121, and 42 C.F.R. part 73). 

The agents and toxins specified under these regulations are generally subject to export controls 

administered by Commerce. To this extent, the discussion above regarding Commerce’s 

methodology applies to transactions involving these critical technologies, as well. 

C. Analyzing the Acquisitions of U.S. Critical Technology Companies 

CFIUS agencies addressed parts (i) and (ii) of section 721(m)(3) of the Defense Production Act 

of 1950 (50 U.S.C. App. 2170(m)(3)), as amended, by doing the following: 

 Analyzing the pattern of M&A of U.S. critical technology companies during 2011, while 

also considering transactions in prior years, as appropriate. 

o CFIUS agencies concentrated on foreign direct investment through M&A of 

companies involved in all critical technologies, regardless of industry. 

 

13 The M&A transactions were identified using the Thomson ONE database and S&P Capital IQ database. 14 The Thomson ONE database and S&P Capital IQ database were used. 
34 

o CFIUS agencies did not attempt to evaluate issues relating to other avenues of 

foreign access to U.S. critical technologies, such as licensing, contracting, or 

other arrangements that are not M&A transactions. 

 Assessing illicit attempts by government intelligence services of major economic 

competitors to obtain military and dual-use critical technologies. 

o CFIUS agencies did not attempt to evaluate foreign espionage in areas other 

than dual-use, military, or other U.S. critical technologies, or against companies 

not headquartered in the United States. 

o In addition, CFIUS agencies reviewed available information about other countries 

that have historically sought information on critical technologies through the use 

of those countries’ intelligence services. 

D. Defining “Coordinated Strategy” for Purposes of Section II of this Annual Report 

CFIUS agencies continue to use the following definition of “coordinated strategy”: 

 A plan of action reflected in directed efforts developed and implemented by a foreign 

government, in association with one or more foreign companies, to acquire U.S. 

companies with critical technologies. The efforts of a single company in pursuit of 

business goals, absent indications of specific government direction, were not considered 

to be a coordinated strategy. Individual company strategies encompass such business 

goals as: entry into the U.S. market; increased market share; increased sales; access to 

new technologies; and diversification out of mature industries. 

o Examples of suspect behaviors that could be evidence of a coordinated strategy 

include: 

- A pattern of actual or attempted acquisitions of U.S. firms by foreign 

entities; 

- Evidence that specific completed or attempted acquisitions of companies 

with critical technologies had been ordered by foreign governments or 

foreign government-controlled firms; or 

- The provision of narrowly targeted incentives by foreign governments or 

foreign-controlled firms (e.g., grants, concessionary loans, or tax breaks), 

especially those that appear to market observers to be disproportionately 

generous, to acquire U.S. firms with critical technologies. 

E. Participating Agencies and Entities – Critical Technologies Section II 

 Department of Commerce 

o Bureau of Industry and Security 

o International Trade Administration 

o National Telecommunications and Information Administration 

 Department of Defense – Defense Technology Security Administration 

 Department of Justice 

 Department of State 

o Bureau of Economic, Energy, and Business Affairs 

o Bureau of Political-Military Affairs 

o Bureau of International Security and Nonproliferation 

 Department of the Treasury 

 Intelligence Community Elements 

o Office of the Director of National Intelligence, National Intelligence Council 

o Air Force Office of Special Investigations 
35

o Army Counterintelligence Center 

o Central Intelligence Agency 

o Defense Intelligence Agency 

o Federal Bureau of Investigation, National Security Branch 

o Department of Energy, Office of Intelligence and Counterintelligence 

o Department of Homeland Security, Office of Intelligence and Analysis 

o Department of State, Bureau of Intelligence and Research 

o Department of the Treasury, Office of Intelligence and Analysis 

o Marine Corps Intelligence Activity 

o Office of the National Counterintelligence Executive, Community Acquisition Risk 

Section 

o National Counterterrorism Center 

o National Geospatial-Intelligence Agency 

o National Security Agency 

o Naval Intelligence (Office of Naval Intelligence and Naval Criminal Investigative 

Service) 

 Executive Office of the President 

o Council of Economic Advisors 

o National Security Council 

o Office of Science and Technology Policy