Chinese groups insure against blocked foreign deals

Chinese companies facing tighter US regulatory scrutiny of their overseas deals are being offered a novel solution: insurance policies that pay out if a takeover is blocked on national security grounds, the Financial Times reports. A wave of Chinese acquisitions in the US and other overseas markets is drawing intensified attention from the Committee on Foreign Investment in the United States, lawyers say. Last month, for example, China’s Fujian Grand Chip Investment said it had dropped its euro 670m offer for German chip equipment maker Aixtron after failing to win Cfius approval. Earlier last year a Chinese consortium’s $3bn deal to buy a lighting unit from Dutch conglomerate Philips was thwarted by the US regulator. Now 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.