By Kevin Bogardus - 06/07/07 06:39 PM EDT
Dubai Aerospace Enterprise (DAE) is leaving nothing to chance on its $1.8 billion purchase of two aviation companies, Standard Aero Holdings Inc. and Landmark Aviation, from investment firm The Carlyle Group. At least four leading firms have registered to advocate on DAE’s behalf, both on Capitol Hill and with the administration.
Unlike DPW, DAE has been more open in its approach to acquire the aviation companies.
“They tried to sneak [the DPW] deal through,” the president and chief executive of the Organization for International Investment (OFII), Todd Malan, said in comparing the two deals. “It is the tactical decision to be open and transparent.”
OFII represents the 160 largest foreign investors in America.
Glover Park stressed caution in a fact sheet intended to help secure DAE’s acquisition.
By placing certain assets in a trust, DAE has demonstrated its “understanding of potential security and political sensitivities by ensuring there is no interface between the business and commercial aircraft or airfield operations,” according to the memo. Glover Park attached to the fact sheet a chart of the facilities DAE does not plan to retain.
DAE has underscored its ties to America, noting that the United Arab Emirates is “a strong U.S. ally” and that DAE is led by an American chief executive, Bob Johnson, formerly of Honeywell Aerospace.
The memo was dated more than a week before an April 2 Securities Exchange Commission filing said that DAE planned to purchase the companies. Lobbyists approached relevant committee staffers and members of Congress before the deal went public to ensure the process went smoothly, according to a House Democratic aide.
“From the onset of this process, the goal has [been to] make sure that Congress stays well-informed in an open and transparent way,” an official involved in the transaction said.
“No politician wants to be caught flat-footed,” Malan said. “It is much better you go to people and tell them yourself than them hearing it from Lou Dobbs.”
DAE’s roster of lobbyists and lawyers is heavy on Democrats and those with experience in mergers and acquisitions, especially in foreign investment.
Those working on the deal include: Glover Park’s Brett O’Brien, a presidential campaign adviser to former House Minority Leader Dick Gephardt (D-Mo.); Skadden Arps’s Ivan Schlager, onetime chief counsel to the Senate Commerce, Science and Transportation Committee under former Sen. Ernest “Fritz” Hollings (D-S.C.); and MWW’s Timothy Yehl, past chief of staff to Sen. Frank Lautenberg (D-N.J.).
DAE is facing tough scrutiny under its review by the Committee on Foreign Investments in the United States (CFIUS). Itself criticized during the DPW scandal, CFIUS, an interagency group chaired by the Treasury Department, judges whether foreign government-owned companies pose a national security risk in purchases of American assets.
“No one knows whether this is a safe deal or not — the jury is still out,” Rep. Carolyn Maloney (D-N.Y.) said. The congresswoman expressed confidence that CFIUS’s review of the DAE deal would be “thorough.”
Maloney has sponsored legislation to tighten up the CFIUS process this Congress, which passed the House this February with a unanimous vote. The Glover Park fact sheet stated the DAE deal would be “consistent” with Maloney’s bill.
The DAE deal strikes a similar note to past work by Schlager and others at Skadden Arps. According to the Glover Park memo, DAE is prepared to accept an “evergreen” provision — essentially allowing CFIUS to reinvestigate years later if they feel that national security is at risk — as well as other tough conditions in hopes that the process “is conducted in a normal and non-political way.”
A transaction that instituted the provision was last year’s merger between Alcatel and Lucent Technologies Inc. Skadden Arps was heavily involved in the negotiations, with Schlager representing Alcatel.
Maloney’s bill has been referred to the Senate. A similar CFIUS reform bill was voted out of the Banking, Housing and Urban Affairs Committee last month.
Senate staffers are completing the report to accompany the bill and are hoping to file it by the end of this week, according to an aide to panel Chairman Chris Dodd (D-Conn.).
The deal is still undergoing a CFIUS review. Though many have given little notice to it, Maloney has not yet passed judgment on the DAE acquisition.
“Until those reforms are officially in place ... I know that many of my colleagues and I will be keeping a watchful eye on this review and others,” she said.