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U.S. Reviewing 2nd Dubai Firm
Of the 1,500 acquisitions that have been referred to the CFIUS, one has been rejected. But deals with security implications tend to fall through before the 45-day investigation. In 1989, 204 deals involving the purchase of a company with significant U.S. operations triggered a security investigation. Last year, only 65 went that far.
In the case of Check Point, the security questions were apparently raised early on, according to people familiar with the review. Check Point's proposed $225 million purchase of Laurel-based Sourcefire raised red flags with government cybersecurity officials.
Check Point was built by Gil Shwed, whom Forbes magazine has described as an Israeli billionaire who served in the electronic intelligence arm of the Israeli Defense Forces.
Sourcefire makes network defense and intrusion detection software for an array of customers, including the Defense Department. The company has deep roots in the National Security Agency. Its founder and chief technology officer, Martin Roesch, has served as an NSA contractor. Its vice president of engineering, Tom Ashoff, developed software for the secretive spy agency.
Last August, the Israeli government signed an agreement with the Pentagon to alert the United States before selling other countries technology related to national security. The United States asked for the agreement after learning that Israel had sold unmanned aerial vehicles to China in late 2004.
The CFIUS investigation is to be completed in mid-March.
Check Point officials declined to comment yesterday on the security investigation. In announcing that its deal would be investigated, the company released a statement pledging that "Check Point and Sourcefire are both committed to working cooperatively with the committee during the investigative period."
In the case of Dubai International Capital and Doncasters, an acquisition that ordinarily may have been whisked through the process without objection is now under security investigation, administration sources said. Dubai International Capital is the financial arm of Dubai Holding, an investment conglomerate that is the third-largest shareholder of DaimlerChrysler Corp. and is a major investor in Holiday Inn Express in the Middle East.
Doncasters' expertise is in forging, fabrication, machining and alloy production. The company owns a plant that makes aerospace turbine blades and components in Farmington, Conn.; a turbine and generator plant in Rincon, Ga.; a steel foundry in Springfield, Mass.; and a metal-rolling plant in Groton, Conn. The company's Web site says the Georgia and Connecticut plants manufacture "engine ready airfoils," for aircraft, helicopter and tank engines.