COMMITTEE ON 

FOREIGN INVESTMENT 

IN THE UNITED STATES

ANNUAL REPORT 

TO CONGRESS

Report Period: CY 2012

Issued: December 2013

PUBLIC/UNCLASSIFIED VERSION

CFIUS ANNUAL REPORT TO CONGRESS

Report Period: CY 2012

Issued: December 2013
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i

TABLE OF CONTENTS

Section I: Covered Transactions

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

A. Information on 2012 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:

 2008-2012....................................................................................................................4

 2. Covered Transactions by Country or Economy: 2010-2012 ........................................... 16

D. Withdrawn Notices.............................................................................................................. 19

E. Mitigation Measures............................................................................................................ 20

F. Perceived Adverse Effects of Covered Transactions........................................................... 22

Section II: Critical Technologies

Introduction...............................................................................................................................25

Definitions and Methodologies ................................................................................................ 25

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

 Acquire Critical Technology Companies......................................................................... 25

 1. Key Findings ................................................................................................................... 25

 2. Summary of Foreign M&A of U.S. Critical Technology Companies.................................. 26

 3. Frequency of Activity by Countries/Economies and Companies ...................................... 26

B. Whether Foreign Governments Used Espionage Activities to 

 Obtain Commercial Secrets Related to Critical Technologies......................................... 29

 1. Key Finding ..................................................................................................................... 29

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

Israel or Do Not Ban Terrorist Organizations

Introduction.............................................................................................................................. 30

A. Summary of Findings and Conclusions................................................................................ 30

B. Study Methodology.............................................................................................................. 31

 1. Identification of Relevant Countries.................................................................................. 31

 2. Scope of FDI.................................................................................................................... 31

C. Detailed Findings................................................................................................................. 32

 1. Identification of the Subject M&A Transactions ................................................................ 32

 2. National Security Effects of the Subject M&A Transactions.............................................. 33

Appendix

A. Definition of “Critical Technologies” ......................................................................................34

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

 Technology Companies Acquired by Foreigners ........................................................... 34

C. Analyzing the Acquisitions of U.S. Critical Technology Companies ..................................... 35

D. Defining “Coordinated Strategy” for Purposes of Section II of this Annual Report................ 36

E. Participating Agencies and Entities – Critical Technologies Section II.................................. 36
ii

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

A. Information on 2012 Covered Transactions

The classified version of this report contains a table listing all 114 notices of transactions that 

were filed with CFIUS in 2012 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 114 notices is provided below:

• CFIUS conducted a “review” with respect to the 114 notices of covered transactions filed 

with CFIUS. 

• CFIUS also conducted a subsequent “investigation” with respect to 45 of those 114

notices. 

• Twenty-two of the notices were withdrawn. In 10 of these cases, the parties filed new 

notices in 2012; in two cases, the parties filed new notices in 2013.

• The President took action to prohibit one transaction in 2012. The President issued an 

order prohibiting the acquisition and ownership of four wind farm project companies by 

Ralls Corporation, its owners, its subsidiaries, and its affiliates. The order directs Ralls 

Corporation to divest its interest in the wind farm project companies that it acquired in 

2012, and to take other actions related to the divestment. Ralls Corporation is owned by 

Chinese nationals, and is affiliated with a Chinese construction equipment company that 

manufactures wind turbines. The wind farm sites are all within or in the vicinity of 

restricted air space at Naval Weapons Systems Training Facility Boardman in Oregon. 
3

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

 Withdrawals, and Investigations

In the years 2008 through 2012, companies filed 538 notices of transactions that CFIUS 

determined to be covered transactions under section 721. About six percent (32 notices) of 

such notices were withdrawn during the review stage, 31 percent (168 notices) resulted in an 

investigation, and seven percent (38 notices) were withdrawn during the investigation stage. 

The increase in withdrawals in 2012 is a function of the specific facts and circumstances of the 

particular transactions reviewed by the committee. There was one transaction that resulted in a 

Presidential decision.

There was a moderate increase in the number of notices from 2010 to 2012, coinciding with the 

continuing recovery from the global financial crisis of 2008-2009. As shown in Table I-2, the 

number of notices increased from 93 in 2010 to 111 in 2011 and to 114 in 2012. The 

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

years at 38 percent in 2010, 36 percent in 2011, and 39 percent in 2012.

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*

2008 - 2012

Year Number of 

Notices

Notices 

Withdrawn 

During Review

Number of 

Investigations

Notices 

Withdrawn After 

Commencement 

of Investigation

Presidential 

Decisions

2008 155 18 23 5 0

2009 65 5 25 2 0

2010 93 6 35 6 0

2011 111 1 40 5 0

2012 114 2 45 20 1

Total 538 32 168 38 1

*Please see Section 1.D below for discussion of reasons parties may seek to withdraw a notice.

Table I-2: Covered Transactions, Withdrawals, and Presidential Decisions 2008-2012
4

C. Covered Transactions by Business Sector and Country

1. Covered Transactions by Business Sector of U.S. Companies: 2008-2012

The notices of covered transactions filed with CFIUS during the 2008-2012 period involved a 

wide range of industrial subsectors.2

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

manufacturing sector (223, or 41 percent), while approximately one third of the notices were in 

the finance, information, and services sector (175, or 33 percent). The remainder of notices 

were in the mining, utilities, and construction sector (96, or 18 percent) or the wholesale, retail, 

and transportation sector (44, or eight percent). These figures, and those in the tables below

and in Section I.C.2 of this report, reflect the number of notices filed with CFIUS as required by 

statute 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.

The table and chart below provide a breakdown by sector and by year of the 538 notices of 

covered transactions cumulatively filed with CFIUS from 2008 through 2012. The data below 

show that, as in 2011, the greatest number of filings in 2012 occurred in the manufacturing and 

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

sector increased from 2010 to 2011 (from 39 percent to 44 percent) but decreased in 2012

(from 44 percent to 39 percent). In 2012, the percentage of notices in the finance, information, 

and services sector continued to decline from 2011 and 2010 levels (33 percent, compared to 

34 and 38 percent respectively). The percentage of notices in the mining, utilities, and 

construction sector increased from 2011 to 2012 from 14 percent to 20 percent, after holding

steady in 2011. 

Covered Transaction by Sector and Year, 2008-20123

Year Manufacturing

Finance, 

Information, 

and 

Services

Mining, Utilities, 

and Construction

Wholesale, Retail, 

and Transportation Total

2008 72 (46%) 42 (27%) 25 (16%) 16 (10%) 155

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

2012 45 (39%) 38 (33%) 23 (20%) 8 (7%) 114

Total 223 (41%) 175 (33%) 96 (18%) 44 (8%) 538

Table I-3: Covered Transactions by Sector and Year, 2008-2012

 2 Broad sectors are defined using 2012 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

Covered Transactions by Sector (2008-2012)

0

10

20

30

40

50

60

70

80

2008 2009 2010 2011 2012

Number of Covered Transactions

Manufacturing Finance, Information, and Services

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

Covered Transactions by Sector 2008-2012

Manufacturing Sector

Manufacturing accounted for 39 percent (45 notices) of all notices filed with CFIUS during 2012. 

The computer and electronic products subsector continued to make up about half of the total 

manufacturing notices with 24. Other significant subsectors were machinery with six notices 

and transportation equipment with five. The electrical equipment, appliance, and component 

subsector continued to increase as a percentage of manufacturing notices filed over the past 

three years, up to eleven percent from nine percent from 2009 to 2011 and four percent from 

2008 to 2010. 

Manufacturing NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Manufacturing 

2012

Computer and Electronic Product 334 24 53%

Machinery 333 6 13%

Transportation Equipment 336 5 11%

Electrical Equipment, Appliance, and Component 335 4 9%

Chemical 325 3 7%

Fabricated Metal Product 332 1 2%

Textile Product Mills 314 1 2%

Leather and Allied Product Manufacturing 316 1 2%

Table I-4: Covered Transactions from the Manufacturing Sector 2012
6

Manufacturing NAICS 

Code

% of Total 

Manufacturing from 

2008-2010

% of Total 

Manufacturing 

from 2009-2011

% of Total 

Manufacturing from 

2010-2012

Computer and 

Electronic Product 334 48% 50% 50%

Transportation 

Equipment 336 16% 22% 18%

Electrical Equipment, 

Appliance, and 

Component

335 4% 9% 11%

Machinery 333 12% 8% 9%

Chemical 325 5% 4% 5%

Fabricated Metal 

Product 332 2% 3% 3%

Textile Product Mills 314 2% 1% 2%

Primary Metal 331 6% 1% 1%

Petroleum and Coal 

Products 324 2% 1% 1%

Leather and Allied 

Product 

Manufacturing

316 0% 1% 1%

Miscellaneous 339 1% 0% 1%

Nonmetallic Mineral 

Products 327 2% 0% 0%

Plastics and Rubber 

Products 326 1% 0% 0%

Table I-5: Covered Transactions from the Manufacturing Sector in Past Years

Computer and Electronic Products Subsector

Of the 24 notices filed in the computer and electronic products subsector in 2012, half were in 

the semiconductor and other electronic component manufacturing subsector. This subsector 

also increased as a percentage of notices filed during the past three years, up to 34 percent 

during 2010 to 2012 from 26 percent during 2009 to 2011. The communication equipment 

manufacturing subsector was a significant contributor in 2012 as well with seven notices. 

Computer and Electronic Products NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Computer and 

Electronic 

Products 2012

Semiconductor and Other Electronic Component 

Manufacturing 3344 12 50%

Communication Equipment Manufacturing 3342 7 29%

Navigational, Measuring, Electromedical, and Control 

Instruments Manufacturing 3345 4 17%

Computer and Peripheral Equipment Manufacturing 3341 1 4%

Table I-6: Covered Transactions from the Computer and Electronic Products Subsector 2012
7

Computer and 

Electronic Products

NAICS 

Code

% of Total Computer 

and Electronic 

Products 2008-2010

% of Total 

Computer and 

Electronic Products 

2009-2011

% of Total 

Computer and 

Electronic 

Products 2010-

2012

Semiconductor and 

Other Electronic 

Component 

Manufacturing

3344 27% 26% 34%

Communication 

Equipment 

Manufacturing

3342 32% 30% 29%

Navigational, 

Measuring, 

Electromedical, and 

Control Instruments 

Manufacturing

3345 32% 34% 28%

Computer and 

Peripheral Equipment 

Manufacturing

3341 8% 8% 8%

Manufacturing and 

Reproducing 

Magnetic and Optical 

Media

3346 0 2% 2%

Table I-7: Covered Transactions from the Computer and Electronic Products Subsector in Past 

Years

Transportation Equipment Subsector

Of the five notices filed in the transportation equipment subsector in 2012, most (four notices) 

were in the aerospace products and parts manufacturing subsector. There were no notices in 

the ship and boat building sector in 2012, and this subsector made up eight percent of the 

notices filed from 2010 to 2012, down from 24 percent from 2008 to 2010.

Transportation Equipment NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Transportation 

Equipment 2012

Aerospace Products and Parts Manufacturing 3364 4 80%

Motor Vehicle Parts Manufacturing 3363 1 20%

Table I-8: Covered Transactions from the Transportation Equipment Subsector 2012
8

Transportation 

Equipment

NAICS 

Code

% of Total 

Transportation 

Equipment 2008-

2010

% of Total 

Transportation 

Equipment 2009-

2011

% of Total 

Transportation 

Equipment 2010-

2012

Aerospace Products 

and Parts 

Manufacturing

3364 67% 70% 70%

Motor Vehicle Parts 

Manufacturing 3363 10% 22% 22%

Ship and Boat 

Building 3366 24% 9% 9%

Table I-9: Covered Transactions from the Transportation Equipment Subsector in Past Years

Finance, Information, and Services Sector

The finance, information, and services sector accounted for 33 percent (38 notices) of all 

notices filed with CFIUS during 2012. Professional, scientific, and technical services continued 

to make up about half of these notices filed in this sector (21 notices). The real estate subsector 

was a new contributor with four notices in 2012. The real estate subsector makes up four 

percent of the finance, information, and services notices filed in the past three years from 2010 

to 2012, up from zero in the periods 2009 to 2011 and 2008 to 2010. The rental and leasing 

services subsector and the repair and maintenance subsector also are new contributors in 

2012, both with one notice. These subsectors both make up one percent of the finance, 

information, and services notices from 2012 to 2010, up from zero in the periods 2009 to 2011 

and 2008 to 2010.

Finance, Information, and Services NAICS 

Number 

of 

Notices 

2012

% of Total Finance, 

Information, and 

Services 2012

Professional, Scientific, and Technical Services 541 21 55%

Telecommunications 517 4 11%

Real Estate 531 4 11%

Publishing Industries (except Internet) 511 2 5%

Administrative and Support Staff 561 2 5%

Credit Intermediation and Related Activities 522 1 3%

Motion Picture and Sound Recording Industries 512 1 3%

Other Information Services 519 1 3%

Rental and Leasing Services 532 1 3%

Repair and Maintenance 811 1 3%

Table I-10: Covered Transactions from the Finance, Information, and Services Sector 2012
9

Finance, 

Information, and 

Services

NAICS 

% of Total Finance, 

Information, and 

Services 2008-2010

% of Total Finance, 

Information, and 

Services 2009-2011

% of Total Finance, 

Information, and 

Services 2010-2012

Professional, 

Scientific, and 

Technical Services

541 58% 55% 54%

Publishing Industries 

(except Internet) 511 14% 19% 17%

Telecommunications 517 15% 16% 12%

Administrative and 

Support Staff 561 6% 5% 6%

Real Estate 531 0% 0% 4%

Securities, 

Commodities 

Contracts, and Other 

Financial 

Investments and 

Related Activities

523 1% 3% 3%

Credit Intermediation 

and Related Activities 522 1% 1% 1%

Motion Picture and 

Sound Recording 

Industries

512 0% 0% 1%

Other Information 

Services 519 3% 0% 2%

Rental and Leasing 

Services 532 0% 0% 1%

Waste Management 

and Remediation 

Services

562 1% 1% 1%

Repair and 

Maintenance 811 0% 0% 1%

Data Processing, 

Hosting, and Related 

Services

518 1% 0% 0%

Table I-11: Covered Transactions from the Finance, Information, and Services sector in Past Years

Professional, Scientific, and Related Services Subsector

Of the 21 professional, scientific, and related services notices, no single category accounts for 

more than 29 percent of the notices. The top four subsectors have between six and four

notices. The specialized design services subsector was a new contributor, with one notice filed 

in 2012. This subsector accounts for two percent of the professional, scientific, and related 

services notices filed from 2010 to 2012, up from zero percent in the periods 2009 to 2011 and 

2008 to 2010.
10

Professional, Scientific, and Technical Services NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Professional, 

Scientific, and 

Technical Services 

2012

Management, Scientific, and Technical Consulting 

Services 5416 6 29%

Architectural, Engineering, and Related Services 5413 5 24%

Computer Systems Design and Related Services 5415 4 19%

Scientific Research and Development Services 5417 4 19%

Other Professional, Scientific, and Technical Services 5419 1 5%

Specialized Design Services 5414 1 5%

Table I-12: Covered Transactions from the Professional, Scientific, and Technical Services

Subsector 2012
11

Professional, 

Scientific, and 

Technical Services 

NAICS 

Code

% of Total 

Professional, 

Scientific, and 

Technical Services 

2008-2010

% of Total 

Professional, 

Scientific, and 

Technical Services 

2009-2011

% of Total 

Professional, 

Scientific, and 

Technical Services 

2010-2012

Computer Systems 

Design and Related 

Services

5415 36% 44% 35%

Architectural, 

Engineering, and 

Related Services

5413 28% 27% 28%

Management, 

Scientific, and 

Technical Consulting 

Services

5416 11% 15% 18%

Scientific Research 

and Development 

Services

5417 11% 10% 13%

Other Professional, 

Scientific, and 

Technical Services

5419 3% 4% 3%

Specialized Design 

Services 5414 0% 0% 2%

Investigation and 

Security Services

5616 6% 0% 0%

Facilities Support 

Services 5612 3% 0% 0%

Waste Treatment and 

Disposal Services 5622 2% 0% 0%

Table I-13: Covered Transactions from the Professional, Scientific, and Technical Services 

Subsector in Past Years

Telecommunications Subsector

Of the four telecommunications notices filed in 2012, three were in the wired 

telecommunications carriers subsector. Wired telecommunications carriers notices accounted 

for 31 percent of the telecommunications notices filed from 2010 to 2012, up from 13 percent in 

the period from 2009 to 2011 and seven percent in the period from 2008 to 2010. The wireless 

telecommunications carriers subsector fell to eight percent of notices filed from 2010-2012 from 

27 percent in the 2009-2011 period. 
12

Telecommunications NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Telecommunications 

2012

Wired Telecommunications Carriers 5171 3 75%

Satellite Telecommunications 5174 1 25%

Table I-14: Covered Transactions from the Telecommunications Subsector 2012

Telecommunications NAICS 

Code

% of Total 

Telecommunications 

2008-2010

% of Total 

Telecommunications 

2009-2011

% of Total 

Telecommunications 

2010-2012

Satellite 

Telecommunications 5174 33% 40% 38%

Wired 

Telecommunications 

Carriers

5171 7% 13% 31%

Other 

Telecommunications 5179 27% 20% 23%

Wireless 

Telecommunications 

Carriers (except 

Satellite)

5172 33% 27% 8%

Table I-15: Covered Transactions from the Telecommunications Subsector in Past Years

Mining, Utilities, and Construction Sector

The mining, utilities, and construction sector accounted for 20 percent (23 notices) of all notices 

filed with CFIUS during 2012. Utilities made up about half of this sector with 12 notices. Other 

significant subsectors include mining (except oil and gas) with four notices and oil and gas 

extraction with three notices. The percentage of utilities notices has remained steady, 

accounting for 54 percent of notices filed from 2010 to 2012, 52 percent of notices filed from 

2009 to 2012, and 49 percent of notices filed from 2008 to 2010. 
13

Mining, Utilities, and Construction NAICS 

Code

Number 

of 

Notices 

2012

% of Total Mining, 

Utilities, and 

Construction 2012

Utilities 221 12 52%

Mining (except Oil and Gas) 212 4 17%

Oil and Gas Extraction 211 3 13%

Support Activities for Mining 213 2 9%

Heavy and Civil Engineering Construction 237 2 9%

Table I-16: Covered Transactions from the Mining, Utilities, and Construction Sector 2012

Mining, Utilities, 

and Construction 

NAICS 

Code

% of Total Mining, 

Utilities, and 

Construction 2008-

2010

% of Total Mining, 

Utilities, and 

Construction 2009-

2011

% of Total Mining, 

Utilities, and 

Construction 2010-

2012

Utilities 221 49% 52% 54%

Oil and Gas 

Extraction 211 4% 8% 10%

Mining (except Oil 

and Gas) 212 19% 13% 12%

Support Activities for 

Mining 213 16% 15% 13%

Heavy and Civil 

Engineering 

Construction

237 5% 6% 8%

Specialty Trade 

Contractors 238 4% 4% 4%

Construction of 

Buildings 236 4% 2% 0%

Table I-17: Covered Transactions from the Mining, Utilities, and Construction Sector in Past Years

Electric Power Generation, Transmission, and Distribution Subsector

The electric power generation, transmission, and distribution subsector accounted for most of 

the utilities filings in 2012, with 10. These subsectors also account for a vast majority of utilities 

filings over the 2010 to 2012 period with 71 percent, in addition to 72 percent over the 2009 to 

2011 period and 79 percent over the 2008 to 2010 period. 
14

Utilities NAICS 

Code

Number 

of 

Notices 

2012

% of Total Utilities 

2012

Electric Power Generation, Transmission, and 

Distribution 2211 10 83%

Natural Gas Distribution 2212 1 8%

Water, Sewage, and Other Systems 2213 1 8%

Table I-18: Covered Transactions from the Utilities Subsector 2012

Utilities NAICS 

Code

% of Total Utilities 

2008-2010

% of Total Utilities 

2009-2011

% of Total Utilities 

2010-2012

Electric Power 

Generation, 

Transmission and 

Distribution

2211 79% 72% 71%

Natural Gas 

Distribution 2212 18% 20% 21%

Water, Sewage, and 

Other Systems 2213 4% 8% 7%

Table I-19: Covered Transactions from the Utilities Subsector in Past Years

Wholesale Trade, Retail Trade, and Transportation Sector

The wholesale trade, retail trade, and transportation sector accounted for seven percent (eight

notices) of all notices of covered transactions filed with CFIUS during 2012. The support 

activities for the transportation subsector made up half of this sector, with four notices. The 

proportion of notices from this subsector also increased to 40 percent for the period from 2010 

to 2012 from 30 percent for the period from 2009 to 2011. The proportion of notices from the 

merchant wholesalers, nondurables goods subsector increased to 12 percent for the 2010 to 

2012 period from five percent for the 2009 to 2011 period. The proportion of notices for the 

electronic and appliance stores subsector fell to zero for the 2010 to 2012 period, down from 10 

percent in the 2009 to 2011 period. 
15

Wholesale, Retail, and Transportation NAICS 

Code

Number 

of 

Notices 

2012

% of Total 

Wholesale, Retail, 

and Transportation 

2012

Support Activities for Transportation 488 4 50%

Merchant Wholesalers, Nondurables Goods 424 2 25%

Merchant Wholesalers, Durable Goods 423 1 13%

Water Transportation 483 1 13%

Table I-20: Covered Transactions from the Wholesale, Retail, and Transportation Sector 2012

Wholesale, Retail, 

and Transportation

NAICS 

Code

% of Total 

Wholesale, Retail, 

and Transportation 

2008-2010

% of Total 

Wholesale, Retail, 

and Transportation 

2009-2011

% of Total 

Wholesale, Retail, 

and Transportation 

2010-2012

Support Activities for 

Transportation 488 39% 30% 40%

Merchant 

Wholesalers, Durable 

Goods

423 11% 25% 24%

Merchant 

Wholesalers, 

Nondurables Goods

424 7% 5% 12%

Water Transportation 483 11% 10% 8%

Pipeline 

Transportation 486 4% 10% 8%

Air Transportation 481 4% 5% 4%

Transit and Ground 

Passenger 

Transportation

485 7% 5% 4%

Electronic and 

Appliance Stores 443 11% 10% 0%

Truck Transportation 484 4% 0% 0%

Warehouse and 

Storage 493 4% 0% 0%

Table I-21: Covered Transactions from the Wholesale, Retail, and Transportation Sector in Past 

Years
16

2. Covered Transactions by Country or Economy: 2010-2012

Table I-22 breaks down the notices of covered transactions from 2010 through 2012 by country

or economy and year. Acquisitions by investors from the United Kingdom (“UK”) accounted for 

21 percent of the notices, the largest by far, for the three-year period (68 notices, including one 

notice from an acquirer with UK and German owners), down from 26 percent of all notices for

the 2009-2011 period. UK investors also represented the largest number of notices on a singleyear basis in 2010 and 2011. Investors from Canada and France accounted for an additional 10 

and nine percent respectively over the period (31 and 28 notices), similar to their percentage 

shares in the 2009-2011 period. Investors from China accounted for 12 percent of the notices 

for the period (39 notices), up from seven percent for 2009-2011. Chinese investors accounted 

for the largest number of notices on a single year basis in 2012. Investors from Japan and 

Israel accounted for seven and five percent respectively over the three-year period (23 and 17 

notices).
17

Covered Transactions by Acquirer Home Country/Economy, 2010-2012

Country/Economy 2010 2011 2012 Total

Australia 3 4 3 10

Bermuda 1 0 0 1

Brazil 0 1 2 3

Canada 9 9 13 31

Cayman Islands 0 1 0 1

Chile 1 0 0 1

China 6 10 23 39

Denmark 0 0 2 2

Estonia 0 1 0 1

Finland 1 1 0 2

France 6 14 8 28

Germany 2 3 4 9

Hong Kong 1 0 2 3

India 1 1 4 6

Israel 7 6 4 17

Italy 3 2 1 6

Japan 7 7 9 23

Korea 0 1 2 3

Malaysia 1 1 0 2

Netherlands 2 7 6 15

New Zealand 0 1 0 1

Norway 0 2 1 3

Russian Federation 4 0 2 6

Singapore 1 2 2 5

Spain 3 4 2 9

Sweden 5 6 2 13

Switzerland 2 1 5 8

United Arab Emirates 1 0 0 1

United Kingdom 26 25 17 68

United Kingdom & Germany 0 1 0 1

Grand Total 93 111 114 318

Table I-22: Covered Transactions by Country or Economy: 2010-2012

Table I-23 shows that some countries have a concentration of transactions in certain specific 

industry sectors that vary noticeably from the overall concentration of CFIUS notices in that 

sector. For example, while manufacturing only accounted for 42 percent of all notices filed from 

2010 to 2012, 71 percent (20 of 28) of the notices filed from French acquirers were in 

manufacturing. Mining, utilities, and construction accounted for 16 percent of all notices filed 
18

from 2010 to 2012, while 58 percent (18 of 31) of notices filed from Canadian acquirers and 31 

percent (12 of 39) of notices from Chinese acquirers were in this sector.

Covered Transactions by Acquirer Home Country/Economy and Target Sector, 2010-2012

Country/Economy Manufacturing

Finance, 

Information, 

and 

Services

Mining, Utilities, 

and Construction

Wholesale, Retail, 

and 

Transportation Total

Australia 1 4 3 2 10

Bermuda 0 0 1 0 1

Brazil 1 1 0 1 3

Canada 2 10 18 1 31

Cayman Islands 0 0 0 1 1

Chile 0 0 1 0 1

China 20 7 12 0 39

Denmark 0 0 1 1 2

Estonia 0 0 1 0 1

Finland 0 2 0 0 2

France 20 1 2 5 28

Germany 4 5 0 0 9

Hong Kong 2 1 0 0 3

India 2 4 0 0 6

Israel 8 8 0 1 17

Italy 4 2 0 0 6

Japan 14 6 1 2 23

Korea 1 2 0 0 3

Malaysia 0 1 0 1 2

Netherlands 3 8 2 2 15

New Zealand 1 0 0 0 1

Norway 1 1 1 0 3

Russian Federation 1 3 1 1 6

Singapore 0 0 3 2 5

Spain 1 6 2 0 9

Sweden 4 9 0 0 13

Switzerland 8 0 0 0 8

United Arab Emirates 1 0 0 0 1

United Kingdom 32 28 3 5 68

United Kingdom & 

Germany 1 0 0 0 1

Grand Total 132 109 52 25 318

Table I-23: Covered Transactions by Country or Economy and Target Sector: 2010-2012
19

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 cases in which where the parties are unable to 

address all of the Committee’s outstanding national security concerns within the initial 30-day 

review period and subsequent 45-day investigation period, the parties might request to withdraw 

and re-file their notice to provide themselves with additional time to answer remaining questions 

or to resolve the remaining national security concerns. In other cases, for example, the parties 

might request to withdraw and re-file their notice because a material change in the terms of the

transaction warrants the filing of a new notice. In still other cases, the parties might request to 

withdraw their notice because they are abandoning the transaction for commercial reasons, or 

in light of a CFIUS determination to recommend that the President suspend or prohibit the 

transaction. 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 2012, CFIUS approved the withdrawal of 22 notices. The parties withdrew two notices during 

the 30-day review period and 20 notices after the commencement of the 45-day investigation 

period. In 10 cases, parties re-filed in 2012, and CFIUS concluded action in those cases. In 

two cases, the parties re-filed in 2013. In the remaining cases, the parties abandoned the 

transaction for commercial reasons or in light of CFIUS’s national security concerns, as 

described above. As noted previously, the number of withdrawals in 2012 is a function of the 

specific facts and circumstances of the particular transactions reviewed by the committee.
20

E. Mitigation Measures

From 2010 through 2012, 24 cases (eight percent) resulted in the use of legally binding 

mitigation measures. In 2012, there were CFIUS mitigation measures for eight different covered 

transactions (seven percent). These measures involved acquisitions of U.S. companies 

engaged in the software, information, mining, energy, and technology industries. Four 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 2012 required the businesses involved to take 

specific and verifiable actions, including, for example: 

o Ensuring that only authorized persons have access to certain technology and 

information. 

o Establishing a Corporate Security Committee and other mechanisms to ensure 

compliance with all required actions, including the appointment of a USG-approved 

security officer or member of the board of directors and requirements for security 

policies, annual reports, and independent audits.

o Establishing guidelines and terms for handling existing or future USG contracts, USG 

customer information and other sensitive information.

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

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

o Notifying security officers or relevant USG parties in advance of foreign national 

visits to the U.S. business for approval.

o Notifying relevant USG parties of any awareness of any vulnerability or security 

incidents.

o Termination of specific 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.
21

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:

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.
22

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.
23

• 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 
24

(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.
25

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 1 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 & 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 (the “CFIUS regulations”), 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 report 

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 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, it lists the agencies 

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

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

Acquire Critical Technology Companies

1. Key Finding 

Based on its assessment of 2012 activity, the U.S. Intelligence Community (USIC) judges it 

unlikely that there is a coordinated strategy among one or more foreign governments 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. Indications 

of a coordinated strategy may go unobserved due to limitations on intelligence collection, or 

may be hidden or misconstrued because of foreign denial and deception activities.
26

2. Summary of Foreign M&A Activity in the United States 

Using the methodology described in the Appendix, CFIUS identified 111 completed foreign 

mergers with, or acquisitions of, U.S. critical technology companies involving acquirers from 26 

countries and territories. The USIC evaluated all 111 transactions for indications of a 

coordinated strategy to acquire U.S. critical technologies.

3. Frequency of Activity by Countries and Companies 

Table II-1 lists the originating countries for planned and completed acquisitions of U.S. critical 

technology companies in 2012.

Table II-1: Home Country of Foreign Acquirers of Critical Technology Companies

Country Solo 

Acquisition

Joint 

Acquisition

United Kingdom 28 2

France 13 0

Japan 10 0

Canada 7 0

China 6 0

Germany 6 2

Italy 4 1

Netherlands 4 0

Sweden 4 0

Switzerland 4 0

Ireland 3 0

Spain 3 0

India 2 0

Israel 2 0

Australia 1 1

Bahamas 1 0

Bermuda 1 0

Brazil 1 0

Cayman Islands 1 0

Korea 1 0

Luxembourg 1 0

Singapore 1 0

Taiwan 1 0

Russia 0 1

UAE 0 1

Norway 0 1
27

As shown in Figure II-1, the largest amount of M&A activity involving foreign acquisitions of U.S. 

critical technology companies involved targets whose primary activities are in the aerospace 

and defense sectors.

25

2

18

24 23

3 4

11

1

0

5

10

15

20

25

30

Aerospace

& Defense

Chemicals

Electronics

Information

Technology

Machinery &

Equipment

Metals &

Mining

Pharma &

Biotech

Professional

& Technical

Services

Wholesale &

Retail

Number of 2012

 Critical Technology Transactions

Figure II-1. Sectors of U.S. Critical Technology Companies Acquired in 2012

The data in this report can also be analyzed by the home region of the foreign acquirers. Figure 

II-2 displays the data with the following regional breakdown: Europe; East Asia; Canada &

Australia; and Other. Europe accounts for approximately 68 percent of the transactions.

76

19

9

3

9

0

10

20

30

40

50

60

70

80

90

Europe

(excluding

Russia)

East Asia Canada &

Australia

Middle East &

North Africa

Number of 2012 Critical Technology Transactions

Other

Figure II-2. 2012 Critical Technology Transactions by Region of Foreign Acquirer
28

Figure II-3 shows the regional breakdown of activity by number of transactions in each sector. 

European investors were the most active acquirers of U.S. critical technology companies in 

eight of the nine identified sectors.

16

13

18

17

2

3

6

1

3

1

4 4

5

1 1

3

1

2

1 1 1

2

1

3

1

2

3

0

2

4

6

8

10

12

14

16

18

20

Aerospace & Defense

Chemicals

Electronics

Information Technology

Machinery & Equipment

Metals & Mining

Pharma & Biotech

Professional & Technical

Services

Wholesale & Retail

Number of 2012 Critical Technology Transactions

Europe (excluding Russia)

East Asia

Canada, Australia & New Zealand

Middle East & North Africa

Other

Figure II-3. 2012 Critical Technology Transactions by Region Within Each Sector
29

II-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 critical U.S. technologies.
30

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, 2012, and December 

31, 2012 (CY 2012) (“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 $542 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 more than $542

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

investors during CY 2012 exceeded $121 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.
31

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 2012 pursuant to section 

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

reporting to Congress during 2012 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:

4 Algeria, Iraq, 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 2012 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,

5 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 

 4 Iraq was not included on the 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.

5 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. 
32

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 17 completed M&A transactions in CY 2012 by investors from countries that 

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

Qatar, 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 was one indentified

M&A transaction by investors from Venezuela, a country that was also designated as not 

cooperating fully with U.S. antiterrorism efforts.

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

$542.17 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 11 of the 

18 transactions analyzed in this section of the Annual Report. The value of the 18 total 

transactions, therefore, is necessarily greater than $542 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

49%

Qatar

28%

Kuwait

11%

Lebanon

6%

Venezuela

6%

(U) Figure III-1: Total Transactions by Country of Acquirer

Country Number of 

Transactions

Known 

Transaction 

Value ($mn)

United Arab 

Emirates 9 $3.37

Qatar 5 $537.00

Kuwait 2 n/a

Lebanon 1 n/a

Venezuela 1 $1.80

Total 18 $542.17
33

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

the industries represented by the 18 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

17%

Real Estate

11%

Hotel

17%

Publishing

6%

Professional, 

Scientific, and 

Technical 

Services

22%

Retail Trade

22%

Manufacturing

6%

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

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

Each of the 18 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)

Professional, 

Scientific, and 

Technical Services

4 $100.00

Retail Trade 4 $438.8

Information 

Technology 3 $.076

Hotels 3 $3.29

Real Estate 2 n/a

Publishing 1 n/a

Manufacturing 1 n/a

Total 18 $542.17
34

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 2012. 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): (U) 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 
35

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): (U) 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,6 information on non-publicly announced 

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

31 CFR § 800.209(c): (U) 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 transactions7 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): (U) 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 2012, 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.

 6 (U) The M&A transactions were identified using the Thomson ONE database and S&P Capital IQ database. 7 (U) The Thomson ONE database and S&P Capital IQ database were used.
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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 USIC 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, USIC 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

USIC continues 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
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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
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