The French government has issued interim rules that lower the applicable threshold triggering French foreign investment control for investments by non-European investors in certain French publicly listed corporations. The rules are part of the government's policy response to the economic implications of the COVID-19 pandemic for French strategic assets.
The Takeover Panel has confirmed again in the Brigadier Acquisition Company/Moss Bros case how difficult it is for bidders to invoke material adverse change conditions and lapse offers in the UK. Potential suitors for UK public companies should stay alert to the significant hurdles they face in trying to walk away from an offer once they have made a firm intention announcement.
In response to the COVID-19 pandemic, the French Minister of the Economy recently announced changes to foreign investment rules intended to protect French strategic assets. The measures include lowering the threshold that triggers French foreign investment control for investments by non-European foreign investors in certain French public companies. The minister also issued an administrative order that added biotechnology to the list of critical technologies subject to French foreign investment control.
On April 27, 2020, the Committee on Foreign Investment in the United States (CFIUS) issued an interim rule on filing fees. The interim rule makes filing fees effective on May 1, 2020, and follows CFIUS' March 2020 notice of proposed rulemaking regarding filing fees, largely maintaining the proposed rule, including its fee structure, which ranges from zero to $300,000, depending on the value of the transaction.
As the coronavirus pandemic impacts European companies, the EU and various national governments have begun to take steps to prevent foreign investors from taking advantage of the crisis to acquire companies of strategic importance. Acquirers should consider the possibility that governments will review and challenge acquisitions of companies they perceive to be strategic national assets, through such measures as foreign investment reviews, committee inquiries, state defensive stake-building or even nationalisation of vulnerable companies.
As the COVID-19 pandemic has impacted M&A activity around the world, sellers and buyers will need to assess the landscape for completing deals once the effects of the pandemic begin to subside, including analyzing how the process might change going forward given the altered business circumstances.
In the rapidly changing global investment environment, the Committee on Foreign Investment in the United States remains fully operational. Although some COVID-19 delays are possible, CFIUS is, for now, maintaining its continued focus on China-related transactions and will likely increase scrutiny of health and pharmaceutical sector deals. Simultaneously, foreign direct investment controls are beginning to intensify in Europe, and certain pandemic-related economic responses by governments around the world may themselves implicate some of CFIUS' most recent reforms.
The Impact of COVID-19 on Mergers & Acquisitions
March 12, 2020
On March 12, Skadden held a webinar, “The Impact of COVID-19 on Mergers & Acquisitions,” on the challenges that could arise in mergers and acquisitions amid the economic uncertainty in the wake of the coronavirus’ spread. Speakers included partners Alexandra McCormack, Sonia Nijjar and Paul Schnell.