US authorities have intervened to block the purchase of US-based Contract Development and Manufacturing Organization (CDMO) Snapdragon Chemistry by China-based CDMO Asymchem Laboratories (Tianjin) Co., Ltd (SHE: 002821). According to a press release from Snapdragon, the deal faced opposition from the US Treasury’s Committee on Foreign Investment in the United States (CFIUS), and the two firms were unable to agree on mitigation terms that would have satisfied the committee.
Background of the Deal
Asymchem and Snapdragon, which had previously formed a partnership, announced plans for the buyout in February this year. The deal was envisioned as a synergistic pairing that would allow Snapdragon to scale up its manufacturing capabilities to commercial levels via Asymchem’s Tianjin plant, while providing the Chinese firm with a US footprint. Snapdragon President and CEO Matthew Bio expressed disappointment, stating, “We are disappointed this deal was unable to be completed.”
CFIUS and National Security Concerns
CFIUS was established in 1975 with the authority to block direct foreign investment in US companies on national security grounds. In November 2018, CFIUS’s powers were expanded to allow reviews of any foreign investment in priority technologies, including the biotechnology sector, that would give a 5% or greater holding to a foreign entity. A recent US Treasury report revealed that 44 out of a total of 277 CFIUS ‘notice’ filings during 2021 were related to transactions involving Chinese companies, up from 17 in 2020.-Fineline Info & Tech
