Paris: Any time one American defense company buys another it can trigger government review for a host of reasons, from antitrust to security concerns.
When an American company financed by a foreign entity tries to buy another American company it triggers review by the Committee on Foreign Investment in the United States (CFIUS). It is an obscure but powerful body charged with monitoring the national security implications of the purchase by foreigners of any American company. For example, purchase of a phone company might well trigger a review even though they are not directly involved in military matters.
When you are a substantial defense company owned by foreigners, CFIUS is sure to get involved. And when EADS NA, a subsidiary of Europe’s biggest defense company, recently wanted to buy a tempting target they got reviewed. A competitor also placed a bid, at roughly the same time. EADS put in a fair bid but did not win the prize, CEO Louis Gallois told reporters before the Paris Air Show. Why? The target decided it did not want to wait for the CFIUS review, which can easily last 45 days or more.
I sat down with EADS NA CEO Sean O’Keefe to find out more about the company’s efforts to expand in the U.S. after their recent unsuccessful attempt to win the enormous contract for the next generation airborne tanker.