Tue, Dec 18, 2018 - Page 10 News List

Germany to tighten rules on foreign takeovers

STRATEGIC COMPANIES:The updated rules would allow the government to review or block foreign purchases of stakes as low as 10 percent in ‘security-relevant’ firms

AFP, BERLIN

Germany plans to toughen rules on non-EU share purchases and acquisitions of its strategic companies, a report said on Sunday, amid growing disquiet about takeovers by Chinese firms.

German Chancellor Angela Merkel’s Cabinet plans to approve the law change tomorrow and send it to lawmakers, the Handelsblatt business daily said, without citing its sources.

The update of the Foreign Trade Regulation would allow the German government to review or block foreign purchases of stakes as low as 10 percent in such companies, down from 25 percent.

The regulation would apply to “security-relevant” companies that are crucial to Germany’s defense or “critical infrastructure,” including many high-tech and power companies, but also large food producers.

Germany and other EU member states have voiced growing concern in the past few years as Chinese companies have bought up, or purchased controlling stakes in, airports, harbors and high-tech firms.

Chinese appliance giant Midea Group Co (美的集團) in mid-2016 took over German industrial robotics supplier Kuka AG, sparking alarm in Germany about valuable know-how being transferred abroad.

In the middle of last year, Germany tightened scrutiny on non-EU takeovers of strategic companies, allowing more time for reviews and including a wider range of sectors.

In February, Germany raised no objections when Chinese billionaire Li Shufu (李書福), who chairs auto giant Geely Automobile Holdings Ltd (吉利汽車), bought a near 10 percent stake in the Mercedes-Benz parent company Daimler AG.

However in July, the German government took a minority stake in electricity transmission firm 50Hertz Transmission Gmb, citing national security reasons and thwarting Chinese investors from buying into the company.

“On national security grounds, the federal government has a major interest in protecting critical energy infrastructure,” the German Federal Ministry of Finance and Ministry for Economic Affairs and Energy said in a joint statement at the time.

During a visit to Germany in July, Chinese Premier Li Keqiang (李克強) urged Berlin to grant Chinese companies the access that German companies enjoy in China.

“Our investments do not threaten your national security,” he said. “Through joint projects, we want to learn from your experiences and technologies.”

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