Shein's Everlane Purchase Faces US National Security Review
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US authorities are conducting a national security review of Shein Global Holdings Ltd.'s $80 million purchase of American clothing retailer Everlane. The review by the Committee on Foreign Investment in the US began after the transaction closed in May, with Shein voluntarily initiating the process. The review focuses on potential national-security issues linked to Shein's acquisition of a company that handles Americans' personal data.
Key Facts
- The Committee on Foreign Investment in the US (Cfius) began its review after the $80 million transaction closed in May.
- Shein voluntarily initiated the Cfius review, an unusual step as companies typically seek approval before a transaction closes.
- The review focuses on potential national-security issues linked to Shein's acquisition of a company that handles Americans' personal data.
- Shein engaged Phil Ludvigson, a former senior Treasury official from King & Spalding, to handle the Cfius filing.
The Cfius Review
The Committee on Foreign Investment in the US (Cfius), an interagency panel led by the Treasury Department, began its review after the $80 million transaction was completed in May. Shein voluntarily initiated the review at that time, which is unusual as companies typically seek Cfius approval before a transaction closes. Clearance by Cfius usually prevents future challenges but the body also has the power to block, unwind or impose conditions on transactions it determines threaten US national security. A Shein spokesperson said the company is committed to complying with all applicable laws and regulations in the markets where it operates. The Treasury did not respond to a request for comment, and Cfius reviews are confidential.
National Security Concerns
The Cfius review is focused on potential national-security issues linked to Shein's acquisition of a company that handles Americans' personal data. Such data has become an increasingly sensitive national security issue worldwide, especially in the context of the US-China rivalry with both countries looking to limit the other's access to citizens' information. Shein maintains substantial operations in China even after it moved its headquarters from there to Singapore several years ago. The company remains subject to Chinese regulators, whose blessing it needed to pursue its long-sought initial public offering launched Monday in Hong Kong. At the same time, the US remains among Shein's top markets for sales.
Legal Representation
After announcing the Everlane deal closed, Shein engaged a new lawyer from King & Spalding to handle the filing to Cfius. That lawyer, Phil Ludvigson, is a former senior Treasury official who built the office that pursues deals that Cfius may want to review but which the parties have not proactively flagged to the committee. A spokesperson for King & Spalding referred questions about the Cfius review to Shein.
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Shein's Everlane Purchase Faces US National Security Review
