This is because, once the possibility of a CFIUS review is foreseen in a merger contract, companies have to haggle over who assumes the financial risk under various scenarios.
Sellers try to push for "hell-or-high-water" provisions in contracts requiring the buyers to do whatever it takes in terms of divestitures and other measures to obtain CFIUS approval. Buyers resist this and seek to negotiate in advance what CFIUS remedies would be acceptable to them.
A case in point is Zhongwang USA LLC, which is backed by Chinese aluminum magnate Liu Zhongtian, and its $2.33 billion deal last month to acquire U.S. aluminum company Aleris Corp . Zhongwang USA agreed to "undertake best efforts to obtain CFIUS clearance as soon as practicable," while also limiting any CFIUS-related divestitures it would be willing to accept to 5 percent of Aleris' 2015 U.S. net sales, a regulatory filing shows.
The heightened scrutiny is also jacking up CFIUS-related breakup fees that buyers have to agree to in order to get a deal done, with sellers often asking these to be deposited in escrow accounts for more security. In the case of Zhongwang, it placed its $100 million breakup fee in an escrow account when it signed its deal with Aleris.
Taken together, CFIUS lawyers and other consultants are advising their clients to proactively file with the agency to get out in front of the scrutiny.
"Go to CFIUS before you close a transaction," said Dinallo. "Our experience has been that, if there is no issue, CFIUS has been quick to respond."
Additional reporting by Diane Bartz in Washington D.C., Mike Stone in New York and Sue-Lin Wong in Beijing.
This article was provided by Reuters.