Ingram Micro’s acquisition by China’s HNA Group has come under scrutiny by the US government amid national security concerns.
The $6bn buyout has been submitted to the Committee on Foreign Investment in the United States (CIFUS). The committee consists of representatives from US Homeland Security and Defence and reviews deals within telecoms, healthcare and infrastructure.
The body will now look at the takeover in greater detail to determine whether Chinese foreign investors pose a national security risk. The buyout was announced at the beginning of 2016 and would see Ingram Micro operate as a subsidiary of Tianjin Tianhai, part of the HNA Group, a major Chinese shipping company.
The review signals a major hurdle for the takeover, which can be blocked if the CIFUS determine a threat.
Committee members from US Homeland Security and Defence will now re
The news marks the second blow for Ingram Micro after last week the Shanghai Stock Exchange demanded more details on the specific terms of the deal and how it will be funded. The Exchange also called into question Ingram Micro’s low profit margins, voicing concerns about how the takeover will impact its credit rating.
Despite the review, Ingram has expressed confidence that it will still manage to complete the deal by the end of 2016.
‘The companies continue to expect the transaction to close in the second half of 2016 as previously announced, whereby Ingram Micro will become a part of HNA Group, a Hainan-based Fortune Global 500 enterprise group and a leader in aviation, tourism and logistics, which is the largest stockholder of Tianjin Tianhai,’ Ingram Micro said.
The issue of foreign investment is one that is also being debated in the UK, with Japanese Softbank’s recent £24bn acquisition of British chip maker ARM. New Prime Minister Theresa May has vocal in her plans to review whether foreign investments are right for Britain while the country’s recent decision to exit the EU has also raised investment concerns.