Global Eagle to Cancel $416 Million Deal With Chinese Firm Over National Security Concerns

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Global Eagle to Cancel $416 Million Deal With Chinese Firm Over National Security Concerns
Global Eagle entertainment system.

National security concerns have forced Global Eagle Entertainment, an in-flight Wi-Fi service, to cancel a $416 million investment agreement with China’s Beijing Shareco Technologies to create a new joint venture for the Chinese market.

Marina del Rey’s Global Eagle announced the development in a Securities and Exchange Commission filing on Tuesday.

The agreement was announced in November, but the Committee on Foreign Investment in the United States refused to give it a greenlight in April. The committee did not disclose its reasoning for rejecting the deal.

Shareco, owned by Chinese conglomerate HNA Group, planned to obtain a 34.9 percent ownership stake in Global Eagle and a 51 percent stake in the joint venture through the investment.

Global Eagle had pledged to invest $150 million into the joint venture, a vehicle through the company would have become the exclusive provider of in-flight Wi-Fi and entertainment to HNA’s various airlines, which have about 320 aircraft.

Chinese investments into American companies have come under increased national security scrutiny from the U.S. government, with officials worried that some companies may be secretly controlled by the Chinese government.

National security analysts have suggested that foreign governments could spy on business passengers’ computers using in-flight Wi-Fi systems.

Global Eagle’s share price fell about 11 percent to $2.98 at the close of trading on Wednesday following the news.

Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.

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