- Representative Speier cites U.S. national security concerns
- Speier is top Democrat on House Armed Services subcommittee
A San Francisco congresswoman asked the U.S. Treasury Department to scrutinize Origin Technologies Corp.’s $1.5 billion bid for Affymetrix Inc., citing U.S. national security concerns.
In a letter to Treasury Secretary Jacob Lew, Representative Jackie Speier said that an Origin takeover of Affymetrix, a DNA-testing company that has contracts with federal agencies including the Department of Defense, may pose a national security risk due to the bidder’s ties to the Chinese government. Speier is the top Democrat on the House Armed Services Committee’s oversight panel, and called for the Committee on Foreign Investment in the U.S., known as CFIUS, to examine the transaction.
“I am deeply concerned about the prospect of Affymetrix technologies being acquired by a Chinese firm with such significant government connections,” Speier wrote in the letter. “CFIUS has an obligation to ensure that China does not use state-backed enterprises to acquire control of critical advanced technologies important to American national security and individual privacy.”
Last week, Origin offered about $1.5 billion to buy Affymetrix, topping an earlier offer from Thermo Fisher Scientific Inc. Affymetrix said Sunday that its board rejected the Origin counterbid and continues to recommend moving forward the Thermo Fisher deal.
Origin said in a statement it’s “fully committed to cooperating with” CFIUS and is “prepared to provide Affymetrix with appropriate assurances, through the merger agreement, that we will take any action required by CFIUS to obtain its approval.”
Thermo Fisher Chief Executive Officer Marc Casper said Tuesday that Origin’s bid would likely be subject to a lengthy review, in a letter to Affymetrix shareholders where he urged them to approve his company’s offer.
“A transaction on terms described in the Origin Proposal could not possibly be completed in any timeframe that Affymetrix or its stockholders would consider acceptable, if it could be completed at all,” Casper said.
“Origin appears to be a newly-formed shell entity with no assets of which Affymetrix is aware, and whose sole source of funding for the proposed transaction is $1.5 billion in potential debt commitments,” Affymetrix said in a statement Sunday.
Origin Technologies is owned by a group of former Affymetrix executives led by President Wei Zhou, who had been the vice president of intellectual property and advanced technology. The group has fully committed financing for an acquisition from SummitView Capital, according to its proposal.
SummitView raised its funds in partnership with the Chinese government, according to Speier’s letter.
Representatives for Affymetrix, Origin, and SummitView did not immediately provide comment. Congresswoman Speier’s office declined to comment beyond the letter.
U.S. officials are reviewing more foreign deals and, in particular, more deals from China than ever before, according to a report to Congress, as the amount Chinese investors are spending to snap up U.S. firms set a new record in January. While the number and size of the deals has increased, so has the scrutiny from officials. In Feb. group of U.S. lawmakers said that national security officials should investigate the planned sale of the Chicago Stock Exchange to a Chinese acquirer. Western Digital Corp.’s plan to a stake of itself to Chinese investors fell apart the same month after coming under a U.S. national security review.