CFIUS Divestment

The Committee on Foreign Investment in the United States (CFIUS) is an interagency body chaired by the Secretary of the Treasury that reviews foreign investments, acquisitions, and certain real-estate transactions involving U.S. businesses for national-security risk. Its authority derives from Section 721 of the Defense Production Act of 1950, as amended most recently by the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018.

A CFIUS divestment occurs when the Committee, or the President acting on its recommendation, determines that an existing or proposed foreign-controlled transaction poses a national-security threat that cannot be resolved through mitigation measures such as security agreements, board restrictions, or data-access controls. The remedy is to require the foreign acquirer to sell, unwind, or otherwise relinquish its stake in the U.S. business. The President's authority to block or order divestment is set out in Section 721(d), and such orders are largely insulated from judicial review on the merits, though procedural due-process challenges are possible (see Ralls Corp. v. CFIUS, D.C. Circuit, 2014).

Divestment orders are historically rare but politically prominent. Notable examples include:

• 2012: President Obama ordered Ralls Corp., owned by Chinese nationals, to divest wind-farm assets near a U.S. Navy training site in Oregon.
• 2018: President Trump blocked Broadcom's proposed acquisition of Qualcomm on pre-closing CFIUS grounds.
• 2020: An executive order directed ByteDance to divest TikTok's U.S. operations, triggering years of litigation and negotiation.
• 2022: CFIUS ordered the Chinese owners of the dating app Grindr to divest, completed earlier through a sale to San Vicente Acquisition.

Most CFIUS-related divestments are negotiated quietly during the review period rather than imposed by presidential order. Parties typically file voluntarily, though FIRRMA introduced mandatory declarations for certain transactions involving critical technologies, critical infrastructure, and sensitive personal data (the so-called TID U.S. businesses).