National security concerns redraw global merger and acquisition map

SEOUL, May 11 (UPI) -- The era of "capital without borders" appears to be fading, as a mounting number of cross-border mergers and acquisitions run into resistance from governments that cite national security concerns.

MBK Partners, one of Asia's leading private equity funds, confirmed Monday it abandoned taking over Japanese machine tool maker Makino Milling Machine in the face of opposition from the Tokyo administration.

The decision came after the Japanese government asked MBK Partners late last month to halt the deal under the country's Foreign Exchange and Foreign Trade Act -- only the second such case to date.

Japan's Chief Cabinet Secretary had said the investment "could pose risks to national security."

Makino Milling Machine churns out high-performance, metal-cutting machine tools, which are used not only in electronic products, but also to produce automobiles and weapons.

MBK Partners hinted at disappointment by revealing earlier this month that it has already received approval from U.S. authorities.

The U.S. approval to which MBK was referring was a national‑security review triggered because Makino operates a 600-employee manufacturing facility in Ohio, meaning the acquisition counted as a foreign purchase of a U.S. business.

"MBK Partners' Tokyo office had undergone the [Committee on Foreign Investment] review process late last year related to its investment in Japan's Makino Milling Machine," the company said in a statement.

"The review was completed with approval obtained in the first quarter of this year," it added. "We have diligently fulfilled all procedural requirements mandated by U.S. regulators."

In other words, the transaction was just one step away from completion, with only approval from the Japanese government remaining.

Governments blocking more M&As

The failed Makino deal is not an isolated case. In recent years, several multi-billion-dollar M&A attempts have unraveled amid mounting geopolitical tensions and national security scrutiny.

In 2021, China-based Wise Road Capital's bid to buy South Korean semiconductor firm Magnachip collapsed after U.S. regulators intervened in what was viewed as part of Washington's efforts to contain Beijing's technological rise.

Despite Magnachip's Korean roots, the United States stepped in based on the fact that the firm was listed on the New York Stock Exchange.

China is not simply standing by quietly, as it recently moved to block Meta's acquisition of Manus, an AI startup originally founded in China before relocating operations to Singapore.

Late last year, Meta disclosed its purchase of the outfit, but Chinese regulators in April ordered the $2 billion transaction to be unwound without providing detailed explanations.

Last year, Nippon Steel managed to purchase U.S. Steel only after granting the U.S. government unusually broad oversight powers, which observers point out would have been unthinkable just a decade ago.

"Ten years ago, you could buy almost any foreign company as long as you had enough money. However, that is not the case any more," Seoul-based consultancy Leaders Index CEO Park Ju-gun told UPI.

"In the era of emerging physical AI, governments are paying attention not only to software firms but also to hardware manufacturers. Against this backdrop, cross-border M&As are likely to become more difficult in the future," he said.

Economic commentator Kim Kyeong-joon, formerly vice chairman of Deloitte Consulting Korea, concurred.

"Going forward, we will not be able to ensure that the highest bidder will automatically prevail in the global M&A market. More and more regulators are demanding trusted capital," Kim said in a phone interview.

"Governments will become more reluctant to accept investments, which can lead to adversarial influence. Potential buyers will have to prove that they are reliable partners that can support domestic supply chains," he said.

Kim said that even the definition of strategic industries and products can shift dramatically.

"Rare earth elements were once viewed simply as commodities, but they have become strategic materials. Following the war in the Middle East, even crude oil seems to have become a strategic asset. Many others are feared to follow the same trajectory," he said.

Rare earth minerals comprise 17 critical elements, which are significant for a range of high-tech industries, including defense equipment, electric cars, robotics and advanced display technologies.

China dominates their global supply and has faced criticism for leveraging that position during trade disputes.

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This story was originally published May 11, 2026 at 11:53 AM.