Technology and Science24 August, 20262 min read
Cfius Launches National Security Review Of Shein’s Everlane Purchase After $80 Million Deal
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CFIUS launched a national security review of Shein Global Holdings' Everlane acquisition. National security concerns due to Americans’ data; Everlane deal completed in May for $80 million.
5 outlets told this the same way.
CFIUS flags Everlane deal
US authorities are conducting a national security review of Shein Global Holdings’ purchase of American clothing retailer Everlane after Shein sought approval for the deal, with the Committee on Foreign Investment in the US (Cfius) launching the review after the US$80 million transaction was completed in May. The review is described as an inter-agency panel led by the Treasury Department, and it is focused on potential national security concerns arising from Shein’s acquisition of a company that processes personal data of US citizens.
Shein voluntarily initiated the review at that time, which is described as unusual because companies typically seek Cfius approval before a transaction closes. A Shein spokesperson said the company is “committed to complying with all applicable laws and regulations in the markets where we operate” as the outcome of the Cfius process remains unclear.
Confidential process, shifting timing
The review is tied to the timing of Shein’s filing, with sources saying the Cfius notice was submitted after the deal closed and that the application was not prompted by any government intervention or investigation. One account says the review concerns potential risks related to Shein’s acquisition of a company that processes Americans’ personal data, while also noting that what decision Cfius will make is currently unknown.
The Straits Times reports that Cfius reviews are confidential and that the Treasury did not respond to a request for comment, while also describing Shein’s continued substantial operations in China after it moved its headquarters to Singapore several years ago. In the same reporting, the paper says Shein engaged a new lawyer from King & Spalding to handle the filing to Cfius, identifying the lawyer as Phil Ludvigson and quoting Rick Sofield on how Cfius often scrutinises large data sets in Chinese acquirer deals.
Broader regulatory pressure mounts
The Cfius review adds to a list of regulatory hurdles for Shein in the United States, where the company has faced legal and regulatory claims including a lawsuit filed by Texas Attorney General Ken Paxton in February.
The Straits Times says Paxton sued Shein alleging it unlawfully sold toxic products to consumers and exposed Americans’ personal data to China’s government, and it adds that Shein “strongly” disagreed with the allegations and is contesting the case.
The same source reports that the Federal Trade Commission is investigating Shein’s US business operations for potential violations of consumer protection laws, and it says Shein has said it’s cooperating with the probe.
Separately, The Business of Fashion reports that Shein is seeking to raise as much as $1.8 billion in its long-awaited IPO and is set to debut on the Hong Kong stock exchange on Sept. 1, while also describing an interagency panel led by the US Treasury Department beginning a review after an $80 million transaction was completed in May.