China Groups Take Out Insurance Against Blocking of Foreign Deals

Insurance policies cover risk, and Chinese companies anticipate more protectionism in the United States and Europe and an increasingly uncertain market for foreign investment. Chinese analysts also expect delays and increased fees associated with regulatory reviews. New policies are designed to protect against blocked takeovers in other nations: “several insurance groups, led by Aon, are marketing products that compensate foreign bidders in full for the ‘reverse break-up’ fees they would have to pay a target company if the US regulator thwarted a deal,” reports Henry Sender for the Financial Times. Critics and government regulators in Europe and the United States eye proposed Chinese acquisitions, and the Committee on Foreign Investment in the United States rejects some for national security reasons. In 2014, China accounted for about 20 percent of almost 150 transactions reviewed by the Committee on Foreign Investment in the United States. – YaleGlobal