RBCT Chapter 602: CFIUS Review
Chapter 602: CFIUS Review
After a successful meeting with Qin Yu and the completion of the equity transfer, Changhong Capital, in accordance with regulations, formally issued a full acquisition offer to the board of directors of Sun Capital, offering a premium far exceeding the depressed market share price.
However, the response was not one of welcome, but rather a cold wall of business competition.
In an interview with The Wall Street Journal, the founder made no secret of his anger and resistance: "Sun's technological assets are the crystallization of Silicon Valley's innovative spirit and core assets belonging to the American technology ecosystem. Handing them over to Asian capital with ulterior motives is a betrayal of the decades of hard work of Sun's engineers."
He portrayed Changhong Capital as a greedy predator intent on stealing Sun Microsystems' core technology, and his remarks quickly went viral in the tech world and the media.
He convened an internal meeting, painting a horrific picture of what would happen if the company were acquired by external capital, including but not limited to: technology outflow, R&D stagnation, massive layoffs, and brand demise.
He also promised at the meeting that as long as everyone supports him, he will definitely find a more suitable and trustworthy knight in shining armor to save the sun.
He attempted to leverage Microsoft's corporate aura and local status to create immense competitive pressure and public opinion influence on Changhong Capital.
According to Zhang Sui's intelligence, Microsoft was indeed evaluating the possibility of intervention. While its true intention might have been merely to disrupt the market or seize opportunities rather than a full acquisition, this was because Microsoft at that time wasn't particularly interested in processor architecture; their focus was on continuously upgrading and improving Windows. Furthermore, they had been affected by the bursting of the internet bubble, resulting in a sharp drop in their stock price. However, this was enough for Andy Bertolson to see as a lifeline.
The CFI, a behemoth led by the U.S. Treasury Department and including representatives from the Department of Defense, Department of Justice, Department of Commerce, Department of Homeland Security, Department of Energy, and other agencies, has officially launched a national security review of Changhong Capital's proposed acquisition of Sun Microsystems.
The reason is that Sun Microsystems possesses a large amount of technology involved in critical infrastructure, and a change in its ownership could pose a potential risk to national security.
For confidentiality and security reasons, Huang Xiaochuan went to Changhong Capital's office building in Uptown New York, where Zhang Sui reported the whole matter to him.
"Boss! Now the CFI is demanding that we provide detailed background information on the ultimate controlling shareholder, the ultimate traceability of the relevant funding sources, and a management plan for Sun Microsystems' technology, R&D, and data security after the acquisition, especially government contracts and sensitive technologies involved. They also want us to provide a firewall plan to ensure that core data and data do not leak out, as well as an assessment and handling plan for Sun Microsystems' existing contracts involving security or critical infrastructure."
Huang Xiaochuan picked up the document and carefully looked at the stringent requirements and terms.
The detailed background of the ultimate controlling shareholder requires penetrating multiple layers of offshore structures, which would make it impossible for him to hide behind the scenes any longer.
The tracing of the source of funds, Changhong Capital's massive capital pool, especially the huge profits it obtained after the 9/11 attacks, will certainly become the focus of the investigation.
Other aspects include technology management and data security plans, and existing contract security level assessments.
Looking at the densely packed letters, Huang Xiaochuan couldn't help but feel a headache coming on. Damn it, you could say the US is bad, but you have to admit they're quite professional in some areas.
Zhang Sui seemed to guess what her boss was thinking: "Boss, Andy Bettorson's move is ruthless. He has successfully dragged our normal business acquisition into issues of national security and technological sovereignty. Now that the CFI is involved, it means that we are facing not only price negotiations, but also comprehensive scrutiny and media siege. Although Microsoft is bluffing, Andy Bettorson has used this to create a lot of smokescreens and additional pressure for us."
Huang Xiaochuan put down the documents in his hand, leaned back in the wide chair, and unconsciously touched his nose. His gaze was deep, and he was not intimidated by the difficulties in front of him. Having lived two lives, he was no stranger to this kind of ideological barrier, but this was the first time he had personally experienced it.
"It's not a big deal. As the saying goes, when soldiers come, generals will block them; when water comes, earth will dam it. It's normal for Andy Bertosen to want to protect the Sun he created and their technological barriers. But I don't think Sun Microsystems is Lockheed Martin. Its core value lies in its open platform and general-purpose server technology, not classified technology. The CFI's review is largely based on Andy Bertosen's instigation and the fact that we are an Asian company."
After taking a sip of tea, he looked at Zhang Sui, his eyes flashing with determination: "Since they want to go through the procedures, then we'll see it through to the end. There's a saying that professional matters should be left to professionals. You make the arrangements!"
"Okay!" Zhang Sui immediately understood Huang Xiaochuan's meaning.
She analyzed, "I've looked into relevant cases. Dealing with a CFI review is a major battle that requires top-notch legal, lobbying, and public relations teams working together. I already have a preliminary plan."
After she finished speaking, she paused and looked at Huang Xiaochuan.
Huang Xiaochuan was indeed very interested after hearing this: "Tell me about it!"
"My first step is to hire a top law firm in Washington, D.C., that is best at handling CFI reviews and has deep government connections and a track record of success to lead the effort. They are familiar with the review process, the concerns of key figures, and how to draft mitigation agreements that minimize concerns."
The second step is to select several lobbying firms that have a strong influence on Capitol Hill, especially those closely associated with the defense, technology, and intelligence committees. These firms will then deliver positive messages to key members of Congress and their staff, explaining the business logic of the acquisition and its potential benefits to the technology ecosystem, in order to offset the negative impact that Andy Bettorson has on us.
The third step is to hire a public relations team skilled in handling sensitive issues related to cross-border mergers and acquisitions. This team will be responsible for cultivating a positive image of Changhong Capital as transparent, professional, and committed to the long-term development of Sun Microsystems. We will proactively send positive signals to mainstream financial and technology media, emphasizing that this acquisition is a recognition of the technological value by capital, not 'theft'.
Zhang Sui's reasoning was quite clear, and Huang Xiaochuan immediately approved the plan.
In a capitalist society, efficiency is very high as long as you are willing to spend money. If you are willing to spend money without regard to cost, the efficiency that emerges will simply amaze you!
In just two days, a large and efficient team was assembled.
"R Huang, your resume is excellent, absolutely perfect, and you haven't joined any political group, which is very good." Ed Farrell, a lawyer from a top law firm in the district, was discussing with Huang Xiaochuan how to create a resume that could withstand scrutiny.
"Your academic background is also quite impressive! It's a huge plus. A PhD, an associate professor, and a Clark Medal winner—it couldn't be better. Moreover, after a day and night of research by myself and my team, we found that the global investment success record of your Hong Kong Avenue Group and Evergreen Capital is also very impressive. This indirectly shows that you are an investor who likes to invest in long-term value."
Huang Xiaochuan waved his hand, his attitude firm: "Let's not consider citizenship for now. Let's proceed with the plan you just presented!"
"Yes, Mr. Huang!"