A Republican congressman is raising alarm at an attempt by the Chinese government to take over an American military company through an unsolicited bid offer.
GOP Rep. [crscore]Duncan Hunter[/crscore] of California wrote a letter Wednesday to Treasury Department Secretary Jacob Lew, urging him to look into the details of the potential transaction.
“It has come to my attention that Terex Corporation, an American Company that manufactures heavy equipment, including cranes for the Army, Navy and other government agencies, has received an unsolicited takeover bid,” he wrote, adding, “the fact that a leading PLA supplier is seeking to purchase an American company that provides critical infrastructure equipment to a number of government agencies, including the Department of Defense and the Department of Homeland Security, demands that the agreement undergo thorough scrutiny if it does materialize.”
The context behind the letter is that Zoomlion Heavy Industry, which is a Chinese government-owned heavy equipment supplier to the People’s Liberation Army, recently issued an offer to take over Terex Corporation, which is currently valued at $3 billion.
In a remarkable display of confidence, Zoomlion stated that it was sure that its bid would sail past the regulatory approval process, which is exactly what sparked concern from Hunter, who wants the Committee on Foreign Investment in the United States to closely examine the deal, as the committee has the authority to block the bid. Jacob Lew sits as chair of the committee.
The Zoomlion bid comes in at $30 a share and 40 percent of the transaction would be financed in cash, and the other 60 percent through debt financing. However, the company admitted in January that because of economic woes in China, net profit for 2015 would plummet.
“The company is confident that the merged company will be an even stronger global enterprise, which will continue to promote innovation and business growth, and create value for its customers, shareholders, employees as well as all stakeholders,” Zoomlion said, according to Reuters.
Such a takeover process raises numerous national security concerns, and Hunter is hoping for a response from Lew mitigating these worries.
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