I understand that the USA have a lot of leverage against any global company and you don't want to displease them, but what are the actual legal foundations for the USA to approve that deal? I mean, the headquarters are in San Jose but the company is Dutch and Lumileds have other offices around the world.
The key issue is that Lumileds itself is organized as a U.S. corporation; its current ownership is inconsequential, whether it's a U.S. citizen or a Dutch conglomerate. CFIUS has had the legal authority to investigate -- and the president to block -- any transaction involving control of a U.S. company by a foreign national since the 1950s.
It's worth noting that while (as far as I'm aware) there are relatively few CFIUS-equivalent organizations worldwide, most countries have some kind of mechanism for similar actions. That they rarely use them is a different issue entirely.
They can always just change nationality. That's a pretty common thing for companies to do. So nationality doesn't matter; it's a flag of convenience at best.
The real issue is that the US government has the final say on which products are legal to sell in the US. If the USG says that no lumileds or products containing lumileds can be sold or imported in the US, then Lumileds is fucked. You don't want to lose the US market. Same goes for the EU.
You can't just pick up your company and move it from one country to another, especially when you're the size of Lumileds. The process for changing domicile is called inversion, and to make it work the U.S. corporation must either be acquired by or merge with a foreign corporation -- and that transaction would, again, be subject to review by CFIUS.
Market access is a big carrot, yes, but it's not the stick in this case.
What's stopping this becoming a new business model for SeaLand? Registering corporations as international entities undercutting the most favorable combinations of incentives from all current countries?
CFIUS reviews M&A deals for any potential national security issues. During the proceeding it needs to balance the legal right of capital to freely enter and depart the country with maintaining secure supplies and critical know-how.
For all we know, Lumileds may be a key supplier for a tier one DOD project, their know how may be exploited to infiltrate US military systems, or foreign ownership may potentially reduce strategic strengths of the US economy in the event of a conflict with the owner's native jurisdiction. (These are possible reasons, I don't know anything specific about Lumileds operations) Since we don't know why they actually got the deal denied, the best we can do is speculate.
Because the deal concerns assets located in the US, CFIUS gets automatic jurisdiction on the transfer of those assets. As for the legality of blocking the transfer on national security grounds, our laws leave open many loopholes for the government to use.
