Review expected in new China buy
Updated: 2015-01-23 13:07
By Paul Welitzkin in New York(China Daily USA)
If China's largest aerospace company attempts to purchase a US-based car-parts manufacturer, the proposed transaction could invite scrutiny from Washington, according to one analyst.
Bloomberg News, citing sources, reported Thursday that Aviation Industry Corp of China, or AVIC, is among the potential suitors for Henniges Automotive Holdings Inc, based in the Detroit suburb of Auburn Hills, Michigan. A spokesman for Henniges declined to comment.
Roy Kamphausen, senior adviser for political and security affairs at the National Bureau of Asian Research in Washington, said the deal may draw a watchful eye from the US.
"Almost certainly the purchase would raise the question as to whether a CFIUS review is in order," Kamphausen told China Daily in an email. "Expect some commentary out of the Hill on the issue."
The Committee on Foreign Investments in the United States (CFIUS) reviews foreign acquisitions, mergers and takeovers of US businesses that raise national security issues. CFIUS is made up of representatives from several federal agencies, including the Department of Defense, the Department of State and the Department of Homeland Security.
Beijing-based AVIC is a State-owned enterprise that makes military aircraft and aircraft for civilian use, according to Kamphausen.
Henniges employs approximately 6,500 workers at operations in China and Europe in addition to the US and is owned by Littlejohn & Co, a private-equity concern based in Greenwich, Connecticut.
A year ago, Henniges acquired the remaining 40 percent of a major sealing systems producer in China from its joint venture with China Academy of Launch Vehicle Technology. Customers for the unit include Dongfeng Peugeot Citroen and Shanghai Volkswagen. It also provides production parts for a General Motors program while employing about 1,500 people.
It wouldn't be the first automotive deal for AVIC. In 2011, AVIC Automobile Industry Holding Co Ltd became the majority stockholder in Nexteer Automotive, a Saginaw, Michigan, maker of steering systems and driveshaft components.
Eric Fedewa, director of global component forecast and analysis at consulting concern IHS, said Henniges makes sealing products for automotive doors and windows.
"The rubber that you see around your car window or door may have come from Henniges," Fedewa told China Daily.
He said Henniges also makes rubber bushings for front suspension-system components like stabilizers.