Tackling Protectionism Issues in Cross-Border M&A

Article excerpt

Protectionist issues in cross-border M&A seem to be morphing into concerns about national security, according to a panel of three distinguished M&A professionals who participated in an interactive Hve video webcast, Cross Border M&A:The RisingTide of Nationalism and Protectionism. The webcast, sponsored by Merrill DataSite® and presented by Global Finance magazine, focused on how prevalent issues of protectionism are in 2011.

Some high-profile deals, such as the proposed hook-up, announced in January, of the New York Stock Exchange with Deutsche Borse, have shown there are stül considerable protectionist concerns in the US. But although deal volume has been rising steadily for three years now and looks set to grow sharply in 201 1, protectionist issues should not be overstated, commented Jim Lavelle, managing director and co-head of the industrials group at international investment bank Houlihan Lokey. Lavelle pointed out that die vast majority of cross-border deals are mid-sized, meaning they generally don't have the visibility of larger deals so they don't raise the security concerns or prompt a protectionist backlash.

Allen Miller, partner and head of international law firm Chadbourne & Parke's M&A practice, warned that size may not be a defense against protectionist concerns, however. He pointed out, for example, that the Committee for Foreign Investment in the United States has thrown up roadblocks to deals as small as $2 million. "It's not about size, it's about national security," he said.

Lest anyone think it's only the United States with concerns with security issues, China recently passed a raft of regulations that attempts to do the same thing, Miller added.

Lavelle noted that in other countries and regions these concerns often focus on natural resource companies - such as in 2010 s squelched attempted takeover of Potash Corp. …