What the Smithfield deal can teach Chinese investors

The Committee on Foreign Investment in the United States (CFIUS) recently approved the largest ever takeover of a US business by a Chinese company. Shanghui International Holdings's $7.1 billion acquisition of US pork processer Smithfield Foods was completed after receiving approval from CFIUS in September 2013 following its 45-day investigation into the national security implications of the transaction. The deal triggered heated debate over foreign takeovers in the US and the transparency of the government review process.

Chinese interest in US companies has not been without controversy, even though the vast majority of Chinese investments in the US have been approved, or have not required approval under CFIUS. The outcome of the Smithfield transaction has been much anticipated as it is expected to lead to more investments from China into the US. It also encourages Chinese companies seeking to acquire controlling interests in US companies to plan ahead and notify CFIUS of proposed transactions that may or may not have national security implications early in the investment process.