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U.S. Hotelier Agrees to Buy Hospitality Software Firm From Chinese Owners Ordered to Sell by Trump



(WSJ) A major U.S. hotel operator has agreed to purchase hotel property management software firm StayNTouch Inc., a $46 million deal that came together after President Trump said the firm’s existing Chinese ownership poses a threat to U.S. national security.


Hotel operator MCR Development LLC is planning to complete by Sept. 30 a cash acquisition of StayNTouch’s mobile platform, according to a person familiar with the deal. The platform enables hotel chains and casinos to manage their properties and enables guests to check into rooms using smartphones.


The New York-based private company operates and owns more than 90 hotels, including Marriott and Hilton brand properties, in 30 states. It also operates nearly a dozen independent hotels, including the recently redeveloped TWA Hotel at New York’s Kennedy International Airport.


MCR Development’s acquisition comes several months after Mr. Trump said he had “credible evidence” that ownership of StayNTouch by Beijing Shiji Information Technology Co. “threatens to impair the national security of the United States.” While Mr. Trump’s order, issued in March, didn’t describe specific national security concerns, regulators are increasingly worried that business acquisitions by foreign entities could compromise the sensitive personal data of U.S. citizens.


The order was similar to Mr. Trump’s directive earlier in August for TikTok’s Chinese owner, Beijing-based ByteDance Ltd., to divest itself of the popular video-sharing app’s U.S. operations. U.S. officials say they are concerned that TikTok, which has been downloaded more than 180 million times in the U.S., could pass on data it collects from Americans streaming videos to China’s authoritarian government. TikTok has said it hasn’t been asked to share data with the Chinese government and wouldn’t do so if asked.


Beijing Shiji Information Technology bought StayNTouch’s operations in September 2018. The price of that purchase wasn’t disclosed. The order set a 120-day deadline to sell the company and notify the U.S. government.


At the time, Mr. Trump’s selloff order marked the sixth time a U.S. president has either blocked a deal or ordered a corporate selloff since Congress authorized the power to intervene in 1988.


MCR Development officials don’t have plans for major operational changes at StayNTouch, which employs 50 people, according to the person familiar with the transaction. Founded in 2013, the Bethesda, Md., firm runs a program that is used in about 550 hotels globally.


The acquisition marks the first tech investment for MCR Development, which uses the platform in several of its hotel properties and plans to invest $10 million in StayNTouch to increase its footprint.


The person familiar with the transaction said that the deal has the approval of the Committee on Foreign Investment in the U.S., a national security panel that reviews acquisitions of U.S. companies by foreign entities for possible security risks. U.S. officials on the panel have given more scrutiny to deals that raise privacy concerns about information collected by the travel industry that could flow back to China.


The national security panel first raised the issue of StayNTouch’s ownership to Mr. Trump.


Source: Wall Street Journal by Katy Stech Ferek

U.S. Hotelier Agrees to Buy Hospitality Software Firm From Chinese Owners Ordered to Sell by Trump U.S. Hotelier Agrees to Buy Hospitality Software Firm From Chinese Owners Ordered to Sell by Trump Reviewed by TechCO on 9/01/2020 Rating: 5

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