HNA Group Co. and SkyBridge Capital have mutually agreed to drop the Chinese conglomerate’s plan to acquire the investment firm and founder Anthony Scaramucci will return as a co-managing partner.
The companies are exploring a relationship to distribute SkyBridge products in China, according to a person familiar with the matter, who declined to be named because the information is private. Both sides agreed that U.S. government approval would take too long.
Scaramucci, the former White House communications director, will focus on strategic planning and marketing. An HNA spokesman said the company hasn’t made any announcement. A SkyBridge spokeswoman declined to comment.
HNA and Scaramucci were awaiting a decision from the government panel that reviews foreign acquisitions of American businesses. The panel, which examines whether transactions may pose a national security risk, told the companies extra steps were needed to proceed with the deal, the person said.
The Trump administration has increased scrutiny of Chinese buyers amid trade tensions between the two countries. That’s led to a string of takeovers that have collapsed over national security threats.
CFIUS Review
The Committee on Foreign Investment in the U.S., an interagency panel led by the Treasury Department, began its formal review of the proposed acquisition in February. The committee has frustrated a number of takeovers since Trump took office, most notably Broadcom Ltd.’s hostile takeover of chipmaker Qualcomm Inc., which Trump blocked in March.
CFIUS doesn’t disclose or comment on its reviews.
Dow Jones earlier reported on Monday that HNA was planning to drop the deal.
The transaction, which valued the fund of hedge funds firm at $180 million or more, was first announced in January 2017. Scaramucci, then best known for throwing lavish hedge-fund industry conferences in Las Vegas, was looking to sell his share in order to take a position in the Trump administration. A subsidiary of HNA agreed to purchase a majority stake in the firm, while a little-known investment company called RON Transatlantic would increase its share.
Analysts said the deal, which valued SkyBridge at more than 7 times EBITDA, or earnings before interest, tax, depreciation and amortization, was high for a fund-of-funds manager. Funds of funds have fallen out of favor in recent years for adding an extra layer of fees to already pricey hedge-fund investments.
Though the initial position for which Scaramucci sold his stake never materialized, the hedge fund impresario ultimately spent an eventful 10 days as Trump’s communications director in July, before being fired by incoming White House Chief of Staff John Kelly.
