Bush Approves Sale of 3 Fairchild Aerospace Divisions to French Firm

WASHINGTON — In another sign of his reluctance to interfere with foreign takeovers of U.S. corporations, President Bush on Friday approved the sale of three aerospace divisions of Fairchild Industries to Matra S.A., a French space and telecommunications company.

The U.S. firms, Fairchild Communications & Electronics Co., Fairchild Control Systems and Fairchild Space Co., produce hardware and software for aerospace systems and spacecraft.

Bush’s decision followed a review by the interagency Committee on Foreign Investment in the United States, which had sought to ensure that Matra developed strict controls to prevent the transfer of sensitive U.S. technology to France and other countries.

Under the plan approved by CFIUS, Matra will place its ownership rights to each firm in a separate trust that would be controlled by U.S. citizens who would be licensed by the Defense Department and would have operating control for at least 10 years.

White House spokesman Marlin Fitzwater said the President had decided “that these steps provide adequate safeguards to protect sensitive technologies from unauthorized transfer outside the United States.”

The case was the latest in a series that the Administration has considered under the 1988 Omnibus Trade Act, which gives the President new authority to block foreign acquisition of a firm if the takeover threatens the national security.

Although CFIUS has asked some foreign companies to strengthen the terms of a takeover agreement to help protect U.S. security interests, so far it has not blocked a proposed takeover completely.

Earlier this month, CFIUS issued proposed regulations seeking to clarify its procedures and ward off unnecessary filings.

Essentially, the agency wants to consider each application on a case-by-case basis.

The issue of foreign takeovers has become an emotional one in the face of a new wave of economic nationalism sweeping the United States.

Opponents have charged that America will be selling its economic independence if the trend continues.

But the White House, backed by many economists, has argued that the number of foreign takeovers of U.S. companies still is small and that to restrict purchases by foreigners would hurt U.S. corporations and block needed financing from abroad.

CFIUS has eight member agencies--the departments of Treasury, State, Defense, Commerce and Justice, the Office of Management and Budget, the U.S. Trade Representative’s Office and the Council of Economic Advisers.

It was established by President Gerald R. Ford in 1976 to deal with fears that purchases of U.S. real estate and farmland by Arab oil-exporting countries would threaten America’s national security. Virtually none of those purchases was blocked.