Navteq-Nokia Deal Will Likely Require CFIUS Notification

Includes: NOK, NVT-OLD
by: The M & A Researcher

With respect to a potential Exon-Florio review of the NAVTEQ Corp. (NVT-OLD) - Nokia Corp. (NYSE:NOK) merger, as this deal will intersect with the FINSA which goes into effect on October 24, there is clearly a strong chance that the companies will notify the CFIUS in this particular case.

Although NVT does not sell highly sensitive products or services to U.S. defense and intelligence agencies, some of its logistical services are indeed used by local and federal government agencies. NVT offers the following brief description of this in its annual report:

Commercial enterprises and government agencies also deploy location-based applications to manage certain aspects of their business. Businesses with large fleets of vehicles benefit from understanding the changing location of the vehicles and optimizing routing in order to achieve fuel and labor efficiencies. Many consumer businesses such as insurers and retailers use geographic information to analyze their customer bases, while utility companies use precise geographic information to understand the location of their assets.

This is a transaction in which an Exon-Florio notification most likely would not have been filed in the past. FINSA will essentially force deals involving non-U.S. acquiror to file with the CFIUS regardless of the presence of national security issues. Whereas the previous indicator for this review, as highlight above, was potentially sensitive products/services changing ownership, it appears that deals like this where no sensitivity issues exist will be subject to Exon-Florio.

That being said, there are clearly no legitimate national security issues associated with this combination, so if an Exon-Florio review does occur, it will be cleared by the CFIUS during the primary review period. In short, the Exon-Florio review will not become a timing issue in this case.