Bass, Berry & Sims attorney Thad McBride provided insight on Tesla Inc.’s recent announcement of potential Saudi Arabian funding to take the company private and how this move could draw scrutiny from the Committee on Foreign Investment in the United States (CFIUS). “The big question is whether this technology is really sensitive enough and whether if acquired by a non-U.S. company it could have some kind of negative impact on U.S. national security,” Thad explained. Thad noted that this could be possible since the Trump administration has announced possible tariffs on auto imports for national security reasons.
The full article, “Elon Musk May Face National Security Review in a Tesla-Saudi Deal,” was published by Bloomberg on August 15, 2018, and is available online. The article ran in several additional outlets, including the Los Angeles Daily News, The Press Enterprise and Prime Tech News.
Thad also provided insight on this matter in an article for The Deal on August 15, 2018. “As much as Tesla is a new type of automotive company and has some new and interesting ways of manufacturing and some new and interesting technologies they still, at the end of the day, are an automotive company, which until recently I don’t think had really been viewed as a national security industry,” Thad noted.
While the nature of Tesla’s technology may not have national security implications, it could cause a stir because of how high profile the deal is. “Even if the nature of what Tesla has in terms of its technology is not that interesting to the Department of Defense or to the U.S. national security apparatus, it’s so high profile of a deal that it’s going to be in the newspaper, Congress people are going to get calls from constituents about it, people may be worried about jobs, people may be worried that this really interesting U.S. automotive and technology company is going to be owned and controlled by Saudis,” Thad explained.
Increased scrutiny from CFIUS on deal reviews in recent years began in 2006 after the sale of the U.K.’s Peninsular and Oriental Steam Navigation Co. to United Arab Emirates-based Dubai Ports DP World. “That’s what kicked off the evolution of CFIUS from a very sleepy government department that had not done much of great interest in most of its history into a much more robust mechanism for reviewing things for national security purposes,” Thad said.
The full article, “Tesla Take-Private May Have to Face CFIUS,” was published by The Deal on August 15, 2018, and is available online (subscription required).