[World Wide Web Reporter Lindy] According to a recent Reuters report, European digital mapping company HERE has decided to reject capital injections from three firms, including Tencent, due to the failure to secure U.S. regulatory approval.
Figure: Bankruptcy investment in HERE due to US security review
Earlier reports from Global Network revealed that in December 2016, HERE announced it had secured a 10% stake from Tencent, Beijing-based digital map provider NavInfo, and Singapore's Government Investment Corporation (GIC), following an acquisition led by German automakers BMW, Audi, and Daimler. Originally owned by Nokia, HERE was acquired by these car companies in December 2015.
Recently, NavInfo stated that due to the sensitive nature of overseas regulatory approvals, the transaction was not approved by the end of the audit period. The company now plans to negotiate with the involved parties and will no longer proceed with the deal.
NavInfo emphasized that this termination does not affect its ongoing cooperation with HERE. The two companies have several existing agreements that are not contingent on the investment being finalized. A joint venture between them is already operational within the country, and they plan to continue working closely together to provide comprehensive and high-quality services to global customers. All parties are exploring alternative ways to strengthen their collaboration.
HERE also confirmed that despite the failed agreement, it will continue to work with NavInfo and Tencent to sell digital maps and location services in China and other regions.
Reuters analysts believe that U.S. authorities are concerned that detailed map data collected by vehicles could fall into Chinese hands, given that HERE holds 80% of the market share for car navigation systems in Europe and North America. Additionally, HERE recently announced a partnership with "Pioneer," which holds 30% of the Japanese market share.
The CFIUS (U.S. Committee on Foreign Investment) has not yet commented on the matter.
This is not the first time the U.S. government has blocked transactions involving Chinese entities. In fact, it's becoming increasingly common as national security concerns grow.
This month, after failing to get CFIUS approval, a Chinese private equity fund named Canyon Bridge Capital Partners was blocked from making a $1.3 billion offer to acquire U.S. chipmaker Lattice Semiconductor. President Trump has also expressed concern over China’s investments in semiconductor technology.
This marks the fourth time in 25 years that a U.S. president has blocked foreign acquisitions over national security reasons. President Obama used this power twice, most notably last year when he prevented a Chinese company from acquiring German semiconductor equipment supplier Aixtron SE. Both previous cases involved Chinese companies, and in 1990, President Bush also blocked a Chinese acquisition of a Seattle-based manufacturer.
Last year, Tsinghua Unisplendour’s attempt to purchase a 15% stake in Western Digital was also affected by CFIUS scrutiny.
According to a recent report by Global Network Technology, the U.S. has launched an official investigation into China’s intellectual property practices. U.S. politicians and military leaders have urged the government to scrutinize more closely Chinese investments in the U.S., particularly in the tech sector.
Currently, several Chinese companies are under review for their attempts to acquire U.S. firms. Ant Financial’s $1.2 billion bid for U.S. money transfer company MoneyGram is one such case. Meanwhile, China Panhai Holding Group is seeking to acquire U.S. insurance firm Genworth for $2.7 billion. U.S. lawmakers are also pushing for stricter scrutiny of other deals involving Chinese companies.
It’s worth noting that according to Rhodium Group data, Chinese investment in the U.S. has surged significantly, reaching over $46 billion in 2016—three times the amount from 2015. Analysts expect Chinese investors to surpass this figure again this year.
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