When Dubai Ports World (DPW) announced its intention in 2006 to purchase the U.S. sea terminal operations owned by Peninsular and Oriental Steam Navigation Co., based in the UK, it catapulted the Committee on Foreign Investment in the United States (CFIUS), charged with examining the national security aspects of foreign takeovers of U.S. corporations, into the political limelight.
Indeed, CFIUS scrutiny posed little meaningful regulatory risk to business before the DPW debacle reared its head.
In the past, a 10 percent interest had been considered the dividing line between control and no control. The new regulations, however, expressly state that threshold to be irrelevant unless "the transaction is solely for the purpose of investment."
"Congress got spun up because buyers were coming in at 9.9 percent," says Mark Plotkin, a partner at Covington & Burling.