Elon Musk reached a major milestone yesterday by gaining support from several companies and investors to buy Twitter. Although the tycoon got a $7.1 billion in support, the presence of certain investors would represent a new obstacle. Agree with Reutersthe Committee on Foreign Investment in the United States (CFIUS) could open an investigation to determine whether the deal poses a national security risk.
According to six regulatory lawyers, the presence of Qatar Holding LLC and Binance enough to get CFIUS’s attention. The first is a subsidiary of the Qatar Investment Authority, the qatar sovereign wealth fund which holds stakes in companies such as Volkswagen, Iberia, Miramax Films and the Al Jazeera channel. For its part, Binance It is one of the largest cryptocurrency exchange platforms in the world. founded by Chinese-Canadian Changpeng Zhao.
Another important name in the operation is Prince Alwaleed bin Talal of Saudi Arabia, one of Twitter’s largest shareholders. Although the Saudi opposed the initial offer, Elon Musk would have convinced him to maintain his investment in the social network.
Experts believe CFIUS will review the Twitter purchase to determine if there is a national security risk. Despite this, the lawyers consider that the committee is unlikely to block the operation since the participation of these investors is low.
Who is CFIUS and why would they block Elon Musk’s purchase of Twitter?
The Committee on Foreign Investment in the United States is a panel comprised of government agencies. The list includes the departments of Defense, Commerce, State and Homeland Security. The committee reports to the Treasury Department and reviews foreign investment in US companies possible implications for national security.
Although companies are not required to inform CIFUS when they have foreign participation, the committee can initiate a review and stop the operation. Among the most recent cases are the Qualcomm takeover veto, for which Broadcom offered $130 trillion, as well as the attempt to block TikTok which forced ByteDance to get rid of it.
China was enemy number one under the Trump administration and any investment from that country would attract the attention of the government. Although Biden is more interested in Russia, regulators are not neglecting an in-depth CFIUS analysis. The committee considers personal data as critical infrastructure and Twitter processes a large volume.
Richard Sofield, attorney at Vinson & Elkins LLP, believes that Elon Musk’s relationship with China would put Twitter takeover under scrutiny. The United States doesn’t get along with countries that try to outpace it technologically, so if there’s any indication of an advantage for the Asian giant, the CFIUS would take advantage of its powers to stop the operation.
For now, Elon Musk can breathe, as there is no confirmation that CFIUS will review the deal to buy Twitter.