Two separate Chinese investors have reportedly dropped out of an acquisition bid for Chicago Stock Exchange Inc. due to the bid's political controversy and regulatory scrutiny, the The Wall Street Journal reported, citing "people familiar with the matter."
As the Securities and Exchange Commission continues to weigh the bid, Chongqing Jintian Industrial Co. Ltd. and Chongqing Longshang Decoration Co. Ltd. have reportedly exited the investor group looking to acquire the stock exchange. Their departures come as the SEC looks for more information about the group's constituents, according to the report.
The bid has come under intensified political scrutiny as lawmakers have pressed the SEC to block the potential deal, citing national security concerns. The Committee on Foreign Investment in the U.S. approved the bid in December 2016.
In August, the SEC decided to further delay a decision despite SEC staff recommending an approval for the approximate $22.0 million bid, which is still being led by China-based Chongqing Casin Enterprise Group. The investor group is hoping to make the Chicago Stock Exchange a potential platform for U.S. initial public offerings for Chinese companies.
The Chicago Stock Exchange is expected to disclose the exit in the near future, which could prompt an additional comment period for the 20-month-old bid, according to the report.
The bid's controversy has sparked another investor group made up of "all American money" to enter the fray in case the Chinese-led investor group's bid fails to pass regulatory approval. The alternative deal is being lobbied for by Thorn Run Partners' Chas Thomas, who previously worked for Rep. Robert Pittenger, R-N.C., a frequent critic of the potential deal.