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Merger, Acquisition & Divestiture

If you are a State Department registered company, it is important to consider the State Department requirements in the event your company engages in a merger or acquisition.

If the sale or acquisition involves an ITAR registered entity or business (i.e. product line) of an entity, the burden is on the seller to provide advance notification to the U.S. Department of State – Directorate of Defense Trade Controls Compliance (DTCC) of this anticipated sale. Barring any issue or objection by DTCC, DOD, or others within the U.S. Government, the sale may proceed. With the purchase, the buyer agrees to obtain a new DDTC registration for the acquiring company, if the company is not already registered, along with transfer from the seller to the buyer of any existing and required ITAR licensing authority for products and activities of the business being purchased. There are different notification time requirements when the sale is to a foreign company.

It is important that any U.S. company selling a business (regardless of products or business activities) to a foreign company contemplating the purchase of a U.S. business be aware of and ensure that this sale/purchase considers and obtains, where deemed necessary, clearance from Committee of Foreign Investment in the United States (CFIUS). This U.S. Government interagency committee is authorized to investigate and block any transaction or investment by a foreign company that could present possible national security concerns.

 

 

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