New Law May Make Foreign Acquisitions of U.S. Companies More Difficult According to George M. Foote of Bracewell & Giuliani

    Effective October 24 Foreign Acquisitions Will Be under Scrutiny

    WASHINGTON, October 23 /CNW/ - October 24, 2007 is the effective date of
a new law that may sharply increase the potential for political controversy
over foreign investment in the United States.

    The Foreign Investment and National Security Act of 2007 (FINSA)
increases the power of the American President to block a foreign acquisition
on national security grounds. A recommendation to block an acquisition can be
made by the Committee on Foreign Investment in the United States (CFIUS), an
interagency body of the U.S. government.

    FINSA reflects heightened concern over potential national and homeland
security issues associated with foreign acquisitions of U.S. companies. The
new law also opens up the review and investigation process for foreign
acquisitions to many new parties, including Congress, advocacy groups, labor
unions and competing bidders for acquisition targets.

    "While the American economy remains largely open to foreign investment,
the new law increases the risk that domestic political considerations will
influence the approval or rejection of a foreign bid to acquire an American
company," said George M. Foote, partner with Bracewell & Giuliani LLP.
"Recognizing the importance of foreign investment in the U.S., Congress and
the Administration have emphasized that their intent is not to let the new law
disrupt or block routine foreign investments and acquisitions. The new law
will, however, raise the cost and lower the chance for approval of some
foreign acquisitions and could discourage or defeat some investments."

    The new law was drafted to provide protection from terrorism and
specifically includes homeland security in the definition of national
security. It also widens the range of companies that might be subject to
protection from foreign acquisition. Protected assets might include pipelines,
telecommunications systems, waterworks, food supply networks, and high
technology companies.

    Under FINSA, any merger or acquisition that could result in foreign
control of an entity engaged in U.S. interstate commerce may be reviewed by
CFIUS for national security concerns. The results of CFIUS reviews and
investigations must be provided to Congress. Including Congress in the process
will increase public scrutiny of deals and will enable domestic private and
political parties -- including labor unions, activist groups and competitors
for the acquisition target -- to pursue their own agendas in supporting or
opposing a deal. Politicized conflicts and controversies could delay or even
derail transaction approvals.

    "In practice, the new CFIUS process should not significantly discourage
international transactions in America," Mr. Foote said. "The United States
will continue to welcome foreign investment. However, domestic U.S. companies,
potential foreign acquirers, investors and financiers will have to carefully
follow development of the new CFIUS regulations in the coming months. Any
investment in America now must be planned to minimize the risks in the CFIUS
process and with due regard for the political influences that could interfere
with the transaction."

    About Bracewell & Giuliani LLP

    Bracewell & Giuliani LLP is a prominent international law firm. With more
than 400 lawyers in Texas, New York, Washington DC, Connecticut, Dubai,
Kazakhstan and London, we serve clients concentrated in the energy and
financial services sectors worldwide. In 2005, former New York City Mayor
Rudolph W. Giuliani joined the firm as a senior partner. His reputation for
leadership and problem solving is a unique asset for our clients, which
include Fortune 500 companies, major financial institutions, leading private
investment funds, governmental entities and individuals. For more information
about Bracewell, visit

For further information:

For further information: Media Contact For Bracewell & Giuliani LLP Suzy
Ginsburg, 713-721-4774

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