COMMITTEE ON 

FOREIGN INVESTMENT IN 

THE UNITED STATES 

ANNUAL REPORT 

TO CONGRESS

November 2009 

PUBLIC/UNCLASSIFIED VERSION 

CFIUS ANNUAL REPORT TO CONGRESS 

November 2009

PUBLIC/UNCLASSIFIED VERSION
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SECTION I: REPORT ON COVERED TRANSACTIONS 

TABLE OF CONTENTS 

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

A. Information on 2008 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

C.1 Covered Transactions by Business Sectors of U.S. Companies: 2006-2008 .................4

C.2 Covered Transactions by Country: 2006-2008..............................................................13

D. Withdrawn Notices ................................................................................................................16

E. Mitigation Measures ..............................................................................................................17

F. Perceived Adverse Effects of Covered Transactions ............................................................19

LIST OF TABLES 

Table B-1: Covered Transactions, Withdrawals, and Presidential Decisions 2006-2008 .......3

Table C-1: Covered Transactions by Sector and Year, 2006-2008 ........................................4

Table C-2: Covered Transactions from the Manufacturing Sector..........................................5

Table C-3: Covered Transactions from the Computer and Electronics Subsector..................6

Table C-4: Covered Transactions from the Information Sector...............................................7

Table C-5: Covered Transactions from the Professional, Scientific, and Technical Services 

Subsector ..............................................................................................................8

Table C-6: Covered Transactions from the Mining, Utilities, and Construction Sector ...........9

Table C-7: Covered Transactions from the Utilities Subsector .............................................10

Table C-8: Covered Transactions from the Wholesale Trade Sector....................................11

Table C-9: Covered Transactions from the Support Activities for Transportation Subsector 12

Table C-10: Covered Transactions by Country 2006-2008.....................................................14

Table C-11: Covered Transactions by Country and Sector.....................................................15

 

LIST OF FIGURES 

Figure C-1: Covered Transactions by Sector 2006-2008.........................................................4

Figure C-2: Covered Transactions from the Manufacturing Sector..........................................5

Figure C-3: Covered Transactions from the Computer and Electronics Subsector..................6

Figure C-4: Covered Transactions from the Information Sector...............................................7

Figure C-5: Covered Transactions from the Professional, Scientific, and Technical Services 

Subsector ..............................................................................................................8

Figure C-6: Covered Transactions from the Mining, Utilities, and Construction Sector ...........9

Figure C-7: Covered Transactions from the Utilities Subsector .............................................10

Figure C-8: Covered Transactions from the Wholesale Trade Sector....................................11

Figure C-9: Covered Transactions from the Support Activities for Transportation Subsector 12

i 
SECTION II: REPORT ON FOREIGN ACQUISITIONS OF 

U.S. CRITICAL TECHNOLOGY COMPANIES 

TABLE OF CONTENTS 

Executive Summary ....................................................................................................................22

ES.1 Overview .....................................................................................................................22

ES.2 Approach.....................................................................................................................22

ES.3 Key Finding .................................................................................................................23

1 Introduction ...........................................................................................................................24

1.1 Scope of the Report ........................................................................................................24

1.2 Approach to Evaluating Foreign Acquisitions of U.S. Critical Technology Companies ...25

1.3 Report Participants..........................................................................................................27

2 Whether There Is Credible Evidence of a Coordinated Strategy to Acquire U.S. Critical 

Technology Companies ........................................................................................................28

2.1 Key Coordinated Strategy Findings ................................................................................28

2.2 Summary of Foreign M&A Activity in the United States ..................................................28

2.3 Frequency of Activity by Countries..................................................................................28

3 Whether Foreign Governments Used Espionage Activities to Obtain Commercial Secrets 

Related to Critical Technologies ...........................................................................................32

3.1 Key Espionage Finding ...................................................................................................32

APPENDIX A – Methodology and Data Sources Used to Identify U.S. Critical Technology 

Companies Acquired by Foreigners......................................................................................33

APPENDIX B – Country and Sector Detail .................................................................................35

APPENDIX C – Abbreviations and Acronyms ............................................................................38

LIST OF TABLES 

Table 2-1: Home Country of Foreign Acquirers of Critical Technology Companies....................29

LIST OF FIGURES 

Figure 2-1: Completed Transactions by Sector of U.S. Target Company...................................30

Figure 2-2: Completed Foreign Transactions in Critical Technologies, by Region .....................31

Figure 2-3: Completed Transactions by Region within Each Sector...........................................32

Figure B-1: Completed Foreign Transactions in Critical Technologies with Region Detail.........35

Figure B-2: Completed Foreign Transactions in Critical Technologies by Sector and Country ..36

Figure B-3: Completed Foreign Transactions in Critical Technologies by Sector and Country ..37

ii 
iii 

SECTION III: REPORT ON FOREIGN DIRECT INVESTMENT 

IN THE UNITED STATES BY COUNTRIES THAT 

BOYCOTT ISRAEL OR DO NOT BAN TERRORIST ORGANIZATIONS 

TABLE OF CONTENTS 

Introduction .................................................................................................................................39

A. Summary of Findings and Conclusions .................................................................................40

B. Study Methodology................................................................................................................40

C. Detailed Findings...................................................................................................................41

LIST OF TABLES 

Figure C-1: Total Transactions by Country of Acquirer..............................................................42

Figure C-2: Economic Sectors of U.S. Companies Acquired.....................................................42

Figure C-3: CFIUS-Reviewed Transactions by Country of Acquirer..........................................43

Figure C-4: CFIUS-Reviewed Transactions by Sector of U.S. Target Company.......................43

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SECTION I: REPORT ON COVERED TRANSACTIONS 

Introduction 

This section of the Committee on Foreign Investment in the United States (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(m)(2)), 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 filings1

, 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 refiled 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.” 

The Annual Report was provided to Congress in a classified version on September 3, 

2009. This public version contains no information on specific transactions notified to 

CFIUS due to the prohibition in Section 721(c) (50 U.S.C. App. 2170(c)) against public 

disclosure of such information. 

 

1

 For purposes of this report, “filings” means notices filed under section 721. 

1 
2

A. Information on 2008 Covered Transactions 

The classified version of this report contains a table listing all 155 notices of 

transactions that were filed with CFIUS in 2008 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. While that table is not included here 

because of the above-noted disclosure prohibition, provided below is aggregate 

information regarding those 155 notices: 

• CFIUS conducted both a review and an investigation with respect to 23 of the 

155 notices. 

• 23 of the notices were withdrawn. In 20 of these cases, the parties filed a new 

notice. In the other 3 cases, the parties abandoned their transaction. 

• The President did not take action to block or prohibit any transactions in 2008. 
B. Specific, Cumulative, and Trend Data on Covered Transactions, 

Withdrawals, and Investigations 

In the years 2006 through 2008, companies filed 404 notices of transactions that CFIUS 

determined to be covered transactions under section 721. Roughly 10 percent of such 

notices (42 cases) were withdrawn during the review stage, 4 percent (15 cases) were 

withdrawn during the investigation stage, 9 percent (36 cases) resulted in an 

investigation, and less than 1 percent (2 cases) resulted in a Presidential decision. 

There was a modest upward trend over the last three years in the number of notices. 

As shown below in Table B-1, the number of notices of covered transactions increased 

from 111 in 2006, to 138 in 2007, and to 155 in 2008. The percentage of notices that 

were withdrawn from review, or resulted in investigations, rose in 2008 compared to the 

previous two-year period. The percentage of notices withdrawn during an investigation 

fell slightly. In the 2006-2007 period, 10 percent of the notices of covered transactions 

(24 cases) were withdrawn during the review stage, 4 percent were withdrawn in the 

investigation stage (10 cases), and five percent (13 cases) resulted in investigations. In 

2008, 12 percent of the notices of covered transactions (18 cases) were withdrawn 

during the review stage, 3 percent were withdrawn during the investigation stage (5 

case), and 15 percent (23 cases) resulted in investigations. 

In 2006, there were two Presidential decisions. In each of those cases the President 

decided not to suspend or prohibit the transaction in light of agreements between the 

companies concerned and one or more CFIUS member agencies that mitigated U.S. 

Government (USG) concerns. There were no Presidential decisions in 2007 or 2008. 

Covered Transactions, Withdrawals, and Presidential Decisions 

2006 - 2008 

Year Number of 

Notices 

Notices 

Withdrawn 

During 

Review 

 Number of 

Investigations

Notices 

Withdrawn 

During 

Investigation 

Presidential 

Decisions 

2006 111 14 7 5 2 

2007 138 10 6 5 0 

2008 155 18 23 5 0 

Total 404 42 36 15 2 

Table B-1: Covered Transactions, Withdrawals, and Presidential Decisions 2006-2008 

3
C. Covered Transactions by Business Sector and Country 

C.1 Covered Transactions by Business Sectors of U.S. Companies: 2006-2008

The notices of covered transactions filed with CFIUS during the 2006-2008 period 

involved several industrial sectors and a wide range of subsectors. Almost half of such 

notices were in the manufacturing sector (183, or 45 percent), while almost one third of 

the notices were in the information sector (133, or 33 percent). 

The tables and charts below give a breakdown by sector and by year of the 404 notices 

of covered transactions cumulatively filed with CFIUS for 2006 through 2008. The table 

and figure below shows that manufacturing and information were the most active 

industrial sectors in terms of notices filed each year from 2006 through 2008. 

Year Manufacturing Information

Mining, 

Utilities and 

Construction

Wholesale 

Trade Other Total

2006 51 (46%) 33 (30%) 16 (14%) 10 (9%) 1 (<1%) 111

2007 60 (43%) 58(42%) 11 (8%) 9 (7%) 138

2008 72 (47%) 42 (27%) 25 (16%) 16 (10%) 155

Total 183 (45%) 133 (33%) 52 (13%) 35 (9%) 1 (<1%) 404

 Covered Transaction by Sector and Year, 2006-2008

Table C-1: Covered Transactions by Sector and Year, 2006-2008 

Figure C-1: Covered Transactions by Sector 2006-2008 

4 
Manufacturing accounted for 45 percent of the notices filed with CFIUS from 2006 

through 2008. The computer and electronic products subsector comprised 37 percent 

of the 183 manufacturing sector notices during the period. The transportation 

equipment subsector accounted for another 17 percent of the notices in the sector. 

Manufacturing NAICS 

Code 

Number of 

Transactions 

% of Total 

Manufacturing 

Textile Product Mills 314 2 1% 

Petroleum and Coal Products 324 6 3% 

Chemical 325 12 7% 

Plastics and Rubber Products 326 4 2% 

Nonmetallic Mineral Product 327 5 3% 

Primary Metal 331 13 7% 

Fabricated Metal Product 332 7 4% 

Machinery 333 22 12% 

Computer and Electronic Product 334 68 37% 

Electrical Equipment, Appliances, & Components 335 6 3% 

Transportation Equipment 336 31 17% 

Miscellaneous 339 7 4% 

Table C-2: Covered Transactions from the Manufacturing Sector 

Textile Product Mills

Petroleum and Coal Products

Chemical 

Plastics and Rubber Products 

Nonmetallic Mineral Product 

Primary Metal 

Fabricated Metal Product 

Machinery 12%

Computer and Electronic 

Product 37%

Electrical Equip. Appl., &Comp.

Transportation Equipment 

17%

Miscellaneous 

Other 

34%

Manufacturing

Figure C-2: Covered Transactions from the Manufacturing Sector 

5
Semiconductor and other electronic component manufacturing accounted for 32 percent 

of the 68 notices in the computer and electronic products subsector from 2006 through 

2008. Navigational, measuring, electromedical, and control instruments manufacturing 

accounted for an additional 32 percent of the notices in this subsector. 

Computer and Electronic Products NAICS 

Code 

Number of 

Transactions 

% of Total 

Computer 

and 

Electronic 

Products 

Computer and Peripheral Equipment 

Manufacturing 3341 9 13% 

Communications Equipment Manufacturing 3342 15 22% 

Semiconductor and Other Electronic 

Component Manufacturing 3344 22 32% 

Navigational, Measuring, Electromedical, and 

Control Instruments Manufacturing 3345 22 32% 

Table C-3: Covered Transactions from the Computer and Electronics Subsector 

Computer and Peripheral 

Equipment Manufacturing

13%

Communications 

Equipment Manufacturing

22%

Semiconductor and Other 

Electronic Component 

Manufacturing

32%

Navigational, Measuring, 

Electromedical, and 

Control Instruments 

Manufacturing

32%

Computer and Electronic Products

Figure C-3: Covered Transactions from the Computer and Electronics Subsector 

6 
The information sector accounted for 33 percent of all notices of covered transactions 

filed with CFIUS from 2006 through 2008. The professional, scientific, and technical 

services subsector accounted for nearly half of the information sector notices during the 

period. The publishing industries (except Internet) subsector accounted for another 23 

percent of information sector notices. 

Information NAICS 

Code 

Number of 

Transactions 

% of Total 

Information

Publishing Industries (except Internet) 511 30 23% 

Telecommunications 517 22 17% 

Data Processing, Hosting, and Other Related Services 518 1 1% 

Other Information Services 519 3 2% 

Securities and Other Financial Investments 523 3 2% 

Funds, Trusts, and Other Financial Vehicles 525 1 1% 

Professional, Scientific, and Technical Services 541 67 49% 

Administrative and Support Services 561 5 4% 

Waste Management and Remediation Services 561 1 1% 

Table C-4: Covered Transactions from the Information Sector 

Information

Publishing Industries 

(except Internet)

23%

Telecommunications

17%

Data Processing, Hosting 

and Other Related 

Services

Other Information 

Services

Securities and Other 

Financial Investments

Funds, Trusts, and Other 

Financial Vehicles

Professional, Scientific, 

and Technical Services

49%

Administrative and 

Support Services

Waste Management and 

Remediation Services

Other

11%

Figure C-4: Covered Transactions from the Information Sector 

7
Within the professional, scientific, and technical services subsector, computer systems 

design and related services accounted for 39 percent of the subsector’s 65 notices, 

while architectural, engineering, and related services accounted for 36 percent of the 

notices. 

Professional, Scientific, and Technical 

Services 

NAICS 

Code 

Number of 

Transactions 

% of Total PS-T Services 

Architectural, Engineering, and Related 

Services 5413 24 36% 

Computer Systems Design and Related 

Services 5415 26 39% 

Management, Scientific, and Technical 

Consulting Services 5416 10 15% 

Scientific Research and Development Services 5417 6 9% 

Other Professional, Scientific, and Technical 

Services 5419 1 1% 

Table C-5: Covered Transactions from the Professional, Scientific, 

and Technical Services Subsector 

Figure C-5: Covered Transactions from the Professional, Scientific, 

and Technical Services Subsector 

8 
The mining, utilities, and construction sector accounted for 13 percent of the notices of 

covered transactions filed with CFIUS from 2006 through 2008. In this sector, the 

largest percentage of activity involved the utilities–electric power generation subsector, 

which accounted for 52 percent of the notices in this sector. 

Mining, Utilities, and Construction NAICS 

Code 

Number of 

Transactions 

% of Total 

M-U-C 

Oil and Gas Extraction 211 4 8% 

Mining (except Oil and Gas) 212 9 17% 

Support Activities for Mining 213 6 12% 

Utilities - Electric Power Generation, 

Transmission, and Distribution 221 27 52% 

Construction of Buildings 236 4 8% 

Heavy and Civil Engineering Construction 237 1 2% 

Specialty Trade Contractor 238 1 2% 

Table C-6: Covered Transactions from the Mining, Utilities, and Construction Sector 

Mining, Utilities, and Construction

Mining (except Oil and Gas)

17%

Utilities - Electric Power 

Generation, Transmission

and Distribution 

52%

Other

18%

Oil and Gas Extraction

Support Activities for Mining

12%

Construction of Buildings

Heavy and Civil Engineering 

Construction

Specialty Trade Contractor

Figure C-6: Covered Transactions from the Mining, Utilities, and Construction Sector 

9
Utilities - Electric Power Generation, 

Transmission and Distribution 

NAICS 

Code Number of Transactions 

Electric Power Generation, Transmission and 

Distribution 2211 25 

Natural Gas Distribution 2212 2 

Table C-7: Covered Transactions from the Utilities Subsector 

Figure C-7: Covered Transactions from the Utilities Subsector 

10 
Wholesale trade accounted for nine percent of the notices of covered transactions filed 

with CFIUS from 2006 through 2008. Support activities for transportation accounted for 

54 percent of the 36 wholesale trade sector notices during the period. Merchant 

wholesalers, durable goods accounted for another 17 percent of the sector. 

Wholesale Trade NAICS 

Code

Number of

Transactions

% of Total 

Wholesale 

Trade

Merchant Wholesalers, Durable Goods 423 6 17%

Merchant Wholesalers, Nondurable Goods 424 2 6%

Electronics and Appliance Stores 443 1 3%

Water Transportation 483 2 6%

Truck Transportation 484 1 3%

Transit and Ground Passenger

Transportation 485 2 6%

Support Activities for Transportation 488 19 54%

Couriers and Messengers 492 1 3%

Warehouse and Storage 493 1 3%

Table C-8: Covered Transactions from the Wholesale Trade Sector 

Merchant Wholesalers, 

Durable Goods

17%

Merchant Wholesalers, 

Nondurable Goods

Electronics and Appliance 

Stores

Water Transportation

Truck Transportation

Transit and Ground Passenger 

Transportation

Support Activities for 

Transportation

54%

Couriers and Messengers

Warehouse and Storage

Other, 

29%

Wholesale Trade

Figure C-8: Covered Transactions from the Wholesale Trade Sector 

11
Support Activities for Transportation NAICS 

Code Number of Transactions 

Support Activities for Air Transportation 4881 8 

Support Activities for Water Transportation 4883 9 

Freight Transportation Arrangement 4885 2 

Table C-9: Covered Transactions from the Support Activities for Transportation Subsector 

SupportActivities

for Air

Transportation

42%

SupportActivities

for Water

Transportation

47%

Freight

Transportation

Arrangement

11%

Support Activities for Transportation

Figure C-9: Covered Transactions from the Support Activities for Transportation Subsector 

12 
C.2 Covered Transactions by Country: 2006-2008 

The first table below breaks down the notices of covered transactions from 2006 

through 2008 by country and year.2 There is no clear trend in the breakdown of 

transactions by year. Acquisitions by investors from the United Kingdom accounted for 

26 percent of notices for the three-year period (106 notices) and for the largest number 

of notices each year. Canada, France, Israel, and Australia together accounted for an 

additional 29 percent of the total notices over the period (117 notices) and were among 

the leading countries each year. 

The second table below shows that there is no clear tendency of companies in any one 

country to prefer transactions in a specific industry sector. Acquisitions by investors 

from countries that accounted for multiple notices typically also involved multiple 

sectors. 

 

2

 The figures in tables C-10 and C-11 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 refiled, as discussed in Section I.D of this report. 

13
 Covered Transactions by Acquirers' Home Country, 2006-2008 

Country 2006 2007 2008 Total, 

2006-08 

Australia 7 9 11 27 

Australia & United Kingdom 1 1 

Austria 1 2 3 

Bahrain 1 1 

Belgium 2 1 1 4 

Bermuda 1 1 

Brazil 4 1 2 7 

Canada 8 21 6 35 

Canada & Singapore 1 1 

China 3 6 9 

Finland 3 1 4 

France 9 7 12 28 

Germany 4 6 3 13 

Greece 1 1 

Hong Kong 1 1 1 3 

Hungary 1 1 

Iceland 1 1 

India 5 1 6 

Ireland 1 1 2 4 

Israel 9 6 12 27 

Italy 3 3 5 11 

Japan 6 1 8 15 

Korea 1 2 3 

Kuwait 2 2 4 

Lebanon 4 4 

Luxembourg 1 1 2 

Malaysia 1 1 

Mexico 2 2 

Netherlands 4 7 2 13 

Norway 1 1 2 4 

Pakistan 2 2 

Qatar 1 1 2 

Russia 2 8 10 

Saudi Arabia 1 1 1 3 

Singapore 3 1 1 5 

South Africa 1 1 

Spain 2 6 1 9 

Sweden 1 1 

Switzerland 1 6 4 11 

Taiwan 3 3 

UAE 2 7 2 11 

Ukraine 2 2 

United Kingdom 25 33 48 106 

Venezuela & Spain 2 2 

Grand Total 111 138 155 404 

Table C-10: Covered Transactions by Country 2006-2008 

14 
Covered Transactions by Acquiring Country and Target's Sector, 2006-2008 

Country Manufacturing 

Mining, 

Utilities & 

Construction 

Wholesale 

Trade 

Information Educational 

Services Total 

Australia 2 8 7 10 27 

Australia & United 

Kingdom 1 1 

Austria 3 3 

Bahrain 1 1 

Belgium 4 4 

Bermuda 1 1 

Brazil 5 2 7 

Canada 7 8 1 19 35 

Canada & Singapore 1 1 

China 5 1 3 9 

Finland 4 4 

France 14 3 5 6 28 

Germany 4 2 2 5 13 

Greece 1 1 

Hong Kong 3 3 

Hungary 1 1 

Iceland 1 1 

India 6 6 

Ireland 1 1 2 4 

Israel 19 8 27 

Italy 10 1 11 

Japan 5 3 1 6 15 

Korea 2 1 3 

Kuwait 1 2 1 4 

Lebanon 4 4 

Luxembourg 2 2 

Malaysia 1 1 

Mexico 2 2 

Netherlands 9 2 2 13 

Norway 3 1 4 

Pakistan 2 2 

Qatar 2 2 

Russian Federation 8 1 1 10 

Saudi Arabia 2 1 3 

Singapore 2 3 5 

South Africa 1 1 

Spain 7 2 9 

Sweden 1 1 

Switzerland 6 5 11 

Taiwan 3 3 

UAE 6 1 2 2 11 

Ukraine 2 2 

United Kingdom 53 7 5 41 106 

Venezuela & Spain 2 2 

Grand Total 183 52 35 133 1 404 

Table C-11: Covered Transactions by Country and Sector 

15
D. Withdrawn Notices 

Parties cannot withdraw an accepted notice of a transaction unless the Committee 

approves a written request for withdrawal from the parties. Parties may seek to 

withdraw notices for a number of reasons. 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. The parties might then choose to submit a request for 

withdrawal, either to provide additional time to answer remaining questions or to resolve 

remaining national security concerns. In other cases, the parties may withdraw a notice 

because they are abandoning the transaction or because a material change in the terms 

of the transaction warrants the filing of a new notice. When appropriate, the Committee 

has established measures 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 transaction. 

In 2008, 23 total notices were withdrawn. The parties withdrew 18 notices during the 

30-day review period and 5 during the 45-day investigation period. 5 of the notices 

withdrawn relate to the same covered transaction, because they were withdrawn again 

after being refiled. Therefore, the parties withdrew notices concerning only 18 covered 

transactions. The parties abandoned 3 of these transactions and CFIUS concluded 

action on the other 15 transactions. 

16 
E. Mitigation Measures 

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

covered transaction remain in compliance with any risk mitigation measure entered into 

with CFIUS agencies under section 721, whether that measure is a mitigation 

agreement or other condition. For all mitigation measures signed since FINSA became 

effective, Treasury, as Chair of CFIUS, designates each USG signatory to a mitigation 

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

From 1997, when CFIUS first negotiated a mitigation measure in the context of a 

transaction notified under section 721, through 2008, CFIUS agencies entered into a 

total of 51 mitigation agreements with private parties.3 Mitigation measures have 

included a number of different types of legally binding undertakings. These range from 

national security agreements (NSAs), which are contracts that seek to address a 

number of perceived risks, to letters of assurance, which are simpler documents 

appropriate for less complex cases or where the incremental risks posed by the 

transaction are relatively few and easier to mitigate. 

In 2008, CFIUS agencies negotiated, and parties entered into, two mitigation 

agreements related to two different covered transactions.4 Both mitigation measures 

were entered into after issuance of the President’s January 23, 2008, Executive Order 

concerning CFIUS, which established the conditions under which CFIUS agencies may 

seek mitigation measures with respect to notified transactions. 

The USG agencies that are parties to these and earlier agreements use a variety of 

means to monitor and enforce compliance by the companies that are parties, 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 agreement; 

and 

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

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

CFIUS agencies have taken a variety of actions to maximize their ability to monitor 

compliance, including: 

 

3

 The 52 agreements cited in the previous CFIUS annual report mistakenly included three agreements 

negotiated under authorities other than section 721. 

4

 In comparison, CFIUS agencies and the private parties in covered transactions signed 14 mitigation 

agreements in 2007 and 15 agreements in 2006. 

17
o increasing USG staffing levels and assigning staff responsibilities for monitoring 

compliance; 

o designing tracking systems to monitor required reports; and 

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

is drawn upon to analyze compliance with agreements. 

18 
F. Perceived Adverse Effects of Covered Transactions 

Section 721(m) requires that this 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 

unless or until there are no 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 has reviewed present 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. 

These transactions, which have presented a wide range of national security 

considerations, have involved, for example: 

• Foreign control of U.S. businesses that: 

o Provide products and services to agencies of the U.S. Government and state and 

local authorities that have functions that are relevant to national security. 

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

create vulnerability to sabotage or espionage. 

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 in the energy 

sector, 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. 

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, 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. 

• Acquisition of control by foreign persons that: 

o Are controlled by a foreign government. 

19
o Are from a country with a record on nonproliferation and other national securityrelated matters that raises concerns. 

o Have track records of taking or intentions to take actions that could impair U.S. 

national security. 

CFIUS reviews these national security considerations and the particular facts and 

circumstances of transactions to determine whether the transaction will pose national 

security risk. In doing so, CFIUS is concerned with potential adverse effects posed by 

the transaction, with respect to the following factors, 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; or 

(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); 

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

investigation under subsection (b)(1)(B), 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 

20 
21

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 

(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 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. 
SECTION II: REPORT ON FOREIGN ACQUISTIONS OF U.S. CRITICAL 

TECHNOLOGY COMPANIES 

Executive Summary 

ES.1 Overview 

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.” 

This report evaluates those issues for the year 2008. 

ES.2 Approach 

This report uses the definition of “critical technologies” set forth in 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 CFR Part 800: 

“§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 CFR 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 

CFR 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 CFR part 810), and nuclear facilities, 

equipment, and material specified in the Export and Import of Nuclear Equipment 

and Materials regulations (10 CFR part 110); and 

22 
23

“(d) Select agents and toxins specified in the Select Agents and Toxins 

regulations (7 CFR part 331, 9 CFR part 121, and 42 CFR part 73).” 

Adopting this definition of critical technologies in the CFIUS regulations required the 

adoption of new methodologies for identifying U.S. companies involved in research, 

development, or production of critical technologies (“critical technology companies”) for 

purposes of this report. As discussed in more detail below, the list of foreign-acquired 

U.S. critical technology companies used in this report was compiled by CFIUS agencies 

responsible for administering the export control regulations that are referenced in the 

new critical technologies definition. These agencies identified transactions involving 

U.S. critical technology companies based on their respective export control authorities 

and publicly available information. 

CFIUS agencies’ sectoral subject matter experts (SMEs) and the U.S. Intelligence 

Community (IC) reviewed the resulting list of mergers and acquisitions (M&As) for 

evidence of a coordinated strategy on behalf of a foreign government or company. This 

report presents the results of that analysis of 165 completed M&A transactions involving 

foreign investors and U.S. critical technology companies. 

ES.3 Key Finding 

Coordinated Strategy to Acquire Critical Technology Companies

Based on our analysis of 2008 M&A data, we judge 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. 

Use of Espionage Activities to Obtain Critical Technologies

We judge that foreign governments are highly likely to utilize various collection methods 

to obtain U.S. critical technologies.
1 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. This report covers M&A activity during calendar year 2008. 

Unless otherwise specified, references to the country of origin of a foreign investor or 

company do not imply an association of the company with the country’s government. 

1.1 Scope of the Report 

This section of the report is divided into the following subsections5: 

1. Introduction 

2. Whether there is Credible Evidence of a Coordinated Strategy to Acquire U.S. 

Critical Technology Companies 

3. Whether Foreign Governments Used Espionage Activities to Obtain Commercial 

Secrets Related to Critical Technologies 

4. Appendices 

Subsection 1 explains the background, approach, and scope of this report. 

Subsection 2 presents findings based on a review of 165 completed M&A transactions 

identified by the Departments of State, Commerce, and Energy as involving a U.S. 

target company involved in production, research and development, or export of critical 

technologies. This subsection also presents an analysis of those M&A transactions by 

sector of the U.S. target company and country of the foreign investor. 

Subsection 3 discusses economic intelligence gathering, including espionage, used to 

obtain commercial secrets involving critical technologies, and is not limited to foreign 

direct investment. 

Appendix A provides additional detail on the methodology used to identify foreignacquired critical technology companies in this year’s report. Appendix B contains 

detailed charts of each industry sector with the regional and country breakdown of 

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

 

5

 Subsection 2 of last year’s report, an analysis of the extent of foreign direct investment in industries that 

included critical technology companies, is not included in this year’s report because it relied on industry 

codes to identify the “critical technology industries” as the basis of that subsection’s data and analysis. 

With the new, more accurate methodology for identifying critical technology transactions, we no longer 

rely on those codes, which are more general than the technologies of interest, as a proxy for identifying 

the foreign acquisition of specific critical technology companies. 

24 
1.2 Approach to Evaluating Foreign Acquisitions of U.S. Critical Technology 

Companies 

Identifying Foreign-Acquired U.S. Critical Technology Companies

The definition of critical technologies in this year’s report adopts the definition set forth 

in the CFIUS regulations. As a result, CFIUS agencies modified the data sources and 

approach used in last year’s report to identify foreign-acquired U.S. critical technology 

companies in this report, consistent with this new definition. 

The definition of critical technologies set forth in the CFIUS regulations is based on U.S. 

export control regulations, which were determined to be the most reliable and accurate 

means of identifying such technologies. CFIUS agencies responsible for administering 

export controls used a combination of their own official records and publicly available 

information to identify foreign-acquired U.S. companies involved in production, research 

and development, or export of critical technologies. Those agencies identified 165 U.S. 

critical technology companies that were acquired by or received significant investments 

from foreign investors during 2008. 

Defining “Coordinated Strategy” for Purposes of this Report

To meet the statutory requirement of providing “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,” CFIUS agencies 

used the same working definition of “coordinated strategy” as in last year’s report: 

• 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. 

25
Analyzing the Acquisitions of U.S. Critical Technology Companies

CFIUS agencies addressed the requirements of section 721(m)(3) by: 

• Analyzing the pattern of mergers with or acquisitions of U.S. companies in 

industries involved in the research, development, or production of critical 

technologies during 2008, while also considering transactions in prior years as 

appropriate. 

o CFIUS agencies concentrated on foreign direct investment through mergers 

with and acquisitions of companies involved in all critical technologies, 

regardless of industry. 

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 mergers or acquisitions. 

• Assessing illicit attempts by government intelligence services of major economic 

competitors to obtain military and dual-use critical technologies. 

− 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. 

− 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. 

26 
1.3 Report Participants 

Departments and agencies that participated in the development of this section of the 

report were: 

• Department of Commerce 

o Bureau of Industry and Security 

o International Trade Administration 

o National Telecommunications 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 

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 

27
2 Whether There Is Credible Evidence of a Coordinated Strategy to 

Acquire U.S. Critical Technology Companies 

2.1 Key Coordinated Strategy Findings 

We judge 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.6

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. 

2.2 Summary of Foreign M&A Activity in the United States 

Using the methodology described in Subsection 1.2 and Appendix A, the report team 

identified 165 completed foreign mergers with or acquisitions of U.S. critical technology 

companies, involving acquirers from 26 countries and territories. CFIUS agencies and 

the IC evaluated all 165 transactions for evidence of a coordinated strategy to acquire 

U.S. critical technologies. 

2.3 Frequency of Activity by Countries 

Identifying acquirers’ home countries may provide useful insights into the analysis of 

foreign acquisitions of U.S. critical technology companies. Table 2-1 lists the home 

countries of foreign investors that acquired U.S. critical technology companies in 2008.7

 

6

 This judgment and supporting text are formulated differently than in last year’s report to ensure greater 

consistency with current analytic standards. 

7

 Due to data limitations, Table 2-1 may not always show the home country of the ultimate acquirer. 

Some M&A transactions are conducted through affiliates established in one country that are ultimately 

controlled by investors based in another country. Three countries known to attract such affiliates through 

favorable corporate, tax, or bank secrecy laws – the Netherlands, Luxembourg, and Switzerland – 

account for more than 10 percent of the transactions identified by CFIUS for this report. The data 

sources used to identify foreign acquisitions of U.S. critical technology companies (see Appendix A for 

details) may sometimes show the country of incorporation of the legal entity directly involved in the 

transaction, or of an intermediate parent of the acquiring entity, rather than the home country of the 

acquirer’s ultimate parent. 

28 
Country Total

United Kingdom 49

France 15

Israel 13

Canada 12

India 11

Germany 9

Netherlands 9

Japan 9

Taiwan 6

Italy 6

Australia 5

Luxembourg 4

Singapore 4

Switzerland 4

Austria 2

China 2

Norway 2

Russia 2

Sweden 2

Belgium 1

Brazil 1

Hong Kong 1

Lithuania 1

New Zealand 1

South Korea 1

United Arab Emirates 1

Note: Country totals exceed the overall total of 165 due to 

transactions involving acquirers from multiple countries

Table 2-1: Home Country of Foreign Acquirers of Critical Technology Companies 

Thirty percent of the 165 critical technology transactions identified for this report 

originated in the United Kingdom (UK), and another 11 percent originated in Canada, 

Australia, or New Zealand. 

Notably, all six foreign companies that acquired three or more U.S. critical technology 

companies in 2008 were based in the United Kingdom. Moreover, three of the seven 

foreign companies that acquired exactly two U.S. critical technology companies in 2008 

were also based in the United Kingdom. 

29
As shown in Figure 2-1, the largest amount of M&A activity involving foreign acquisitions 

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

the information technology sector, followed by the aerospace and defense sector.8

30

8

81

17 12 8 3 6

0

20

40

60

80

100

Aerospace &

Defense

Chemicals

Energy

Info Technology

Machinery &

Eqpmt

Metals & Mining

Pharmaceuticals

& Biotech

R&D & Testing

Svcs

Transactions

Figure 2-1: Completed Transactions by Sector of U.S. Target Company 

 

8

 The target companies may be active in a number of sectors, only some of which may be related to 

critical technologies. 

30 
The data can also be analyzed by the home region of the foreign acquirers. Figure 2-2 

displays the data with the following regional breakdown: 1) Western Europe,9

 2) 

Canada, Australia, and New Zealand, 3) East Asia,10 and 4) other countries. Western 

European investors accounted for 60 percent of all transactions, with investors from 

East Asia accounting for 13 percent. 

Canada, Australia, 

and New Zealand, 

10%

East Asia, 13%

Western Europe, 

60%

Other, 17%

Total Transactions: 165

Figure 2-2: Completed Foreign Transactions in Critical Technologies, by Region 

 

9

 For this report, “Western Europe” refers to the European Union’s 27 member states plus Switzerland 

and Norway. 

10 For this report, the term “East Asia” includes China, Hong Kong, Japan, Singapore, South Korea, and 

Taiwan. 

31
Figure 2-3 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 the eight identified sectors.

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Aerospace &

Defense

Chemicals

Energy

Info Technology

Machinery &

Eqpmt

Metals & Mining

Pharmaceuticals

& Biotech

R&D & Testing

Svcs

Other

Europe

East Asia

Canada, Australia, and New Zealand

Figure 2-3: Completed Transactions by Region within Each Sector 

Appendix B provides additional detail on the sectors of acquired U.S. critical technology 

companies and the home country of the foreign acquirers. 

 

3 Whether Foreign Governments Used Espionage Activities to Obtain 

Commercial Secrets Related to Critical Technologies 

3.1 Key Espionage Finding 

We judge that foreign governments are highly likely to utilize various collection methods 

to obtain U.S. critical technologies. 

32 
APPENDIX A – Methodology and Data Sources Used to Identify U.S. 

Critical Technology Companies Acquired by Foreigners 

As described in the main body of Section II, this year’s report follows the new definition 

of critical technologies set forth in 31 CFR 800.209. Because this definition of critical 

technologies is specific to the CFIUS regulations, there is no single source that lists all 

U.S. critical technology companies acquired by foreign persons. Therefore, for 

purposes of this 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 165 

U.S. critical technology companies that were acquired by or received significant 

investments from foreign investors in 2008. 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 this report is therefore limited. The various methodologies are described 

below. 

31 CFR 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 CFR 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 a U.S. or 

foreign person, involved in the export or temporary import of a defense article or 

defense service controlled by the ITAR. This allows identification of foreign acquisitions 

of U.S. critical technology companies that produce defense articles or services covered 

under the ITAR. 

31 CFR 800.209(b): This paragraph pertains to 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 CFR 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.

Firms producing items under the regulations specified in this paragraph of 31 CFR 

800.209 are not required to register with the Commerce Department, but, in many 

cases, must obtain a license from the Commerce Department in order to export those 

items (including “deemed exports” to foreign nationals in the United States). To identify 

acquisitions of companies producing items that come under this part of the definition, 

the Commerce Department used a combination of publicly available information on 

33
34 

M&A transactions,11 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 

CFR part 810), and nuclear facilities, equipment, and material specified in the 

Export and Import of Nuclear Equipment and Materials regulations (10 CFR part 

110); 

The Energy Department used a similar approach to that adopted by the Commerce 

Department, checking a list of publicly announced M&A transactions12 against its 

records of export authorizations under 10 CFR part 810 and the Nuclear Regulatory 

Commission’s records of export license requests under 10 CFR part 110. 

31 CFR 800.209(d): This paragraph pertains to select agents and toxins 

specified in the Select Agents and Toxins regulations (7 CFR part 331, 9 CFR 

part 121, and 42 CFR part 73). 

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

controls administered by the Commerce Department. To this extent, the discussion 

above regarding the Commerce Department’s methodology applies to transactions 

involving these critical technologies as well. 

Despite limitations associated with relying on data collected under existing export 

control authorities, this approach to identifying critical technology M&A transactions, 

pursuant to the CFIUS regulations published in November 2008, is superior to relying 

on transactions identified by the industry codes of the U.S. target companies, the 

approach taken in last year's report, because it is more likely to identify relevant 

transactions. 

 

11 The M&A transactions were identified using the ThomsonONE database and Capital IQ’s database of 

M&A transactions. 

12 The list of M&A transactions was drawn from the Capital IQ database. 
APPENDIX B – Country and Sector Detail 

This appendix presents detailed charts of the annual, industry, and regional trends of the 165 completeU.S. companies in critical technology sectors announced in 2008. Figure B-1 shows the distribution of transactions by country within each geographic region, and Figures B-2 and B-3 show the distribution country. The United Kingdom had the largest number of transactions among European countries, folloGermany. Japan had the largest number of transaction from East Asia. Of the remaining countries in and Israel had the largest number of transactions.13

Completed Foreign Deals of U.S. Companies in Critical Technologies

Figure B-1: Completed Foreign Transactions in Critical Technologies with Region Detail 

13 The number of transactions shown in Figures B-1 through B-3 exceeds 165 because several transactions involved acqui

one country. In these cases the transactions were counted more than once. 
Figure B-2: Completed Foreign Transactions in Critical Technologies by Sector and Country 

Aerospace and Defense

United Kingdom

20

Canada

2

Other Countries*

8

Number of Deals 30 

* Includes Australia, India, Israel, Italy, Japan, 

Luxembourg, Russia, and United Arab Emirates

Information Technology

United Kingdom

18

Israel

12

Canada

8

France

7 India

6

Japa

6

Ta

Ne

Other 

Countries*

20

Number of D

* Includes Germany, Singapore, Australia, C

Switzerland, Hong Kong , Norway, Rus

Energy

Canada

1

France

3

Germany

1

Netherlands

1

Number of Deals 6 Pharmaceuticals, Biotechnology, and Life Sciences

United K

2

Other Countries*

7

Number of De

* Includes Austria, France, India, Italy, 

Switzerland

36 
Figure B-3: Completed Foreign Transactions in Critical Technologies by Sector and Country 

Chemicals

Netherlands

3

Germany

2

India

2

Belgium

1

Lithuania

1

Number of Deals 9 R&D & Testing Svcs

United Kingdom

2

Japan

1

Number of Deal

Metals and Mining

Other Countries*

10

Germany

2

Number of Deals 12 

* Includes Australia, Austria, Brazil, France, India, Italy, 

Netherlands, Switzerland, and the United Kingdom

Machinery and Equipment

France

3

Italy

2

Other Countr

7

United Kingdom

6

Number of Deals 

* Includes Australia, Canada, Germany, New Zealand, Norway, Swe
APPENDIX C – Abbreviations and Acronyms 

AFOSI Air Force Office of Special Investigations 

BIS Bureau of Industry and Security, Department of Commerce 

CFIUS Committee on Foreign Investment in the United States 

DIA Defense Intelligence Agency 

DNI Director of National Intelligence 

DSS Defense Security Service 

EAR Export Administration Regulations 

FCC Federal Communications Commission 

GSM Global System for Mobile communications 

IT Information Technology 

ITAR International Traffic in Arms Regulation 

M&A Mergers and Acquisitions 

NAICS North American Industry Classification System 

ONCIX Office of the National Counterintelligence Executive 

R&D Research and Development 

S&T Science and Technology 

SIC Standard Industrial Classification 

SME Subject Matter Expert 

UAV Unmanned Aerial Vehicle 

UK United Kingdom 

UMTS Universal Mobile Telecommunications Systems 

U.S. United States 

USG United States Government 

38 
SECTION III: REPORT ON 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 the Foreign Investment and National Security Act of 2007, or 

“FINSA” (Pub. L. No. 110-49). Section 7(c) of FINSA 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.” 

This section of the CFIUS Annual Report to Congress is the second report drafted in 

accordance with section 7(c) of FINSA. Last year, Treasury complied with this 

requirement by submitting to Congress a report titled, “Report to Congress on Foreign 

Direct Investment in the United States from Certain Countries as Required by the 

Foreign Investment and National Security Act of 2007.” Last year’s report covered the 

period from January 2005 through September 2007. This section of this year’s CFIUS 

annual report covers the period from October 2007 through December 2008. 

39
A. Summary of Findings and Conclusions 

• The flow of foreign direct investment (FDI) into the United States from the relevant 

countries represents a small percentage of the total FDI flows into the United States. 

• The combined value of publicly reported mergers with and acquisitions (“M&A”) of 

U.S. companies, the main form of FDI, by investors from the relevant countries from 

October 2007 to December 2008, totaled $8 billion. The total value of publicly 

announced acquisitions of U.S. companies by all foreign investors during that period 

exceeded $400 billion. 

• FDI in the form of M&A of U.S. companies by investors from the relevant countries 

spanned a number of economic sectors. 

• For the transactions covered by this report, CFIUS either reviewed and concluded 

action under section 721 with no unresolved national security concerns, or CFIUS 

agencies considered the transaction through procedures they have put in place to 

look at transactions that are not notified to CFIUS.

B. Study Methodology 

1. Identification of Relevant Countries

To identify relevant countries that comply with a boycott of Israel, the report team 

considered the list published by the Treasury Department pursuant to section 999 of the 

Internal Revenue Code and the countries identified by the State Department in reporting 

to Congress 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, we interpret the reporting requirement under section 

7(c)(1)(A) of FINSA to apply to the following countries which comply with a boycott of 

Israel and were the source of FDI transactions identified in subsection 3 below during 

the relevant time period (see subsection 2 below): Kuwait, Lebanon, Qatar, Saudi 

Arabia, and the United Arab Emirates. Several other countries, Libya, Syria, Yemen, 

Iran, and Sudan, listed under the State or Treasury statutory provisions cited above, 

were not the source of FDI transactions identified in subsection 3 below during the 

relevant time period (see subsection 2 below). 

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

interpreted section 7(c)(1)(B) of FINSA to apply to countries that were certified in 2008 

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. 

40 
2. Scope of FDI and Time Period 

This report considers transactions between October 1, 2007, and December 30, 2008 

(the “relevant time period”), involving mergers with or acquisitions of U.S. companies by 

investors from countries that comply with any boycott of Israel or that do not ban 

terrorist organizations, referred to throughout this report as “the relevant countries.” 

3. Sources of Data on FDI Transactions 

For this report, our primary sources of data for potential FDI transactions from the 

relevant countries were the following: 

(a) Thomson ONE Banker database: This database is a product of the Thomson 

Financial division of Thomson Corporation. The information on transactions 

provided in the database includes the date of the transaction, the respective 

countries of origin of the acquirer and acquired company, the sector of the 

acquired company, and in most cases, the transaction value and the percentage 

of ownership rights acquired. The transactions considered for this report 

excluded those in the Thomson One Banker database that resulted in an 

ownership stake in a U.S. company of less than 10 percent. 

(b) Transactions voluntarily notified to CFIUS pursuant to section 721. 

(c) Transactions that were the subject of CFIUS agencies’ procedures for 

identifying and considering transactions that were not voluntarily notified to 

CFIUS (“non-notified transactions”). 

C. Detailed Findings 

1. Quantification of FDI into the United States from the Relevant Countries

The study identified 27 completed acquisitions within the relevant time period by 

investors from countries that comply with any boycott of Israel. These transactions 

involved investors from Kuwait, Lebanon, Qatar, Saudi Arabia, and the United Arab 

Emirates. 

The study did not identify any acquisitions of U.S. companies during the relevant time 

period by investors from Cuba, Iran, North Korea, and Syria, countries which do not 

cooperate fully with U.S. antiterrorism efforts, and which were subject to stringent 

economic sanctions during most or all of the relevant period.14 There also were no 

acquisitions of U.S. companies during the relevant time period by investors from Eritrea 

or Venezuela, two countries that were also designated as not cooperating fully with U.S. 

antiterrorism efforts. 

 

14 Certain sanctions relating to North Korea were lifted in October 2008. 

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The combined reported value of the 27 identified transactions is over $7.99 billion.15 

Figure C-1 shows the number and aggregate value of the transactions for each of the 

relevant countries: 

Country Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

Kuwait 3 $2,071

Lebanon 1 $15

Saudi Arabia 2 $143

United Arab 

Emirates 21 $5,761

Total 27 $7,990

 Figure C-1: Total Transactions by Country of Acquirer 

FDI into the United States from the relevant countries during the relevant time period 

spans numerous major sectors of the economy. Figure C-2 shows each of the sectors 

represented by the 27 transactions presented in Figure C-1, noting both the number and 

value of transactions for each sector. 

Sector Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

Energy & Power 5 $124

Financials 3 $2,000

High Technology 4 $2,100

Industrials 6 $362

Materials 2 $114

Media & 

Entertainment 2 $375

Real Estate 2 n/a

Retail 1 n/a

Services 2 $2,915

Total 27 $7,990

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

 

15 Thomson reports data on M&A transaction value only in those cases in which the companies announce 

the value publicly. Thomson did not report, and Treasury staff were unable to determine independently, 

values for 13 of the 27 transactions from the Thomson database analyzed in this report. The value of the 

27 total transactions, therefore, is necessarily greater than $7.99 billion. 

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2. National Security Effects of FDI to the United States from the Relevant Countries

Each of the 27 identified transactions was either formally reviewed by CFIUS under 

section 721 or was considered as part of the non-notified transaction procedures of 

CFIUS and CFIUS agencies. 

Transactions formally reviewed under section 721. CFIUS conducted formal reviews 

under section 721 of six of the 27 completed transactions identified in Table C-1, with a 

total value of approximately $5.5 billion. Figure C-3 shows both the number and value 

of those six transactions for each of the relevant countries. 

 

Country Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

Lebanon 1 $15

Saudi Arabia 1 $100

United Arab 

Emirates 4 $5,357

Total 6 $5,472

Figure C-3: CFIUS-Reviewed Transactions by Country of Acquirer 

Figure C-4 shows the sectors of the six transactions reviewed by CFIUS under section 

721. 

Sector Number of 

Transactions 

Known 

Transaction 

Value ($mn) 

High Technology 1 $2,100

Industrials 2 $357

Materials 1 $100

Services 2 $2,915

Total 6 $5,472

 

Figure C-4: CFIUS-Reviewed Transactions by Sector of U.S. Target Company 

CFIUS concluded action on each of these transactions after reviewing the national 

security considerations posed by the transaction and determining that there were no 

unresolved national security concerns. 

Transactions considered under non-notified transaction procedures. CFIUS agencies 

considered the remaining transactions under their respective “non-notified transaction” 

procedures. Pursuant to these procedures, CFIUS member 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. 

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Where CFIUS or an agency believes that a non-notified transaction may be a covered 

transaction and may raise national security considerations, CFIUS may request that the 

parties file a notice or may self-initiate a review under section 721. An agency would 

not request a filing if it can resolve any national security concerns through its 

independent authorities or if it has sufficient information to conclude that it does not 

have any national security concerns with the transaction. CFIUS requests information, 

and has in the past done so with respect to acquisitions by investors from the relevant 

countries. In cases where such information was requested in the past, the parties to the 

transaction promptly responded by filing a voluntary notice. Consideration by CFIUS 

agencies of non-notified transactions from the relevant countries have so far not 

resulted in requests that CFIUS seek filings by the parties to the transactions. 
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