German Chancellor Angela Merkel’s government has blocked a Chinese defense company from buying up a German firm specializing in satellite and radio technologies, including 5G, over national security risks, local media reported on Thursday.
Based in North Rhine-Westphalia state, IMST is an acquisition target of Addsino Co (航天工業發展), a subsidiary of state-owned defense group China Aerospace Science and Industry Corp (中國航天科工集團), which manufactures military communication systems, German news agency DPA reported, citing a government document.
The German Ministry for Economic Affairs and Energy confirmed that the Cabinet on Wednesday agreed to block an acquisition by an foreign player, but would not name the companies involved.
“The criterion for examination is always the threat posed by a concrete acquisition to the public order or security of Germany,” the ministry said in a statement.
With alarm growing on an increasing number of Chinese companies snapping up German know-how, Merkel’s government is pushing to toughen up oversight of non-EU takeovers.
The government can review purchases of stakes at 25 percent or above, but a draft law is pending before pending on pushing the threshold to as low as 10 percent.
Quoting a government document on the latest blocked takeover, DPA reported that Merkel’s Cabinet found that the potential acquisition constituted “actual and serious risks.”
IMST has developed a key component for the TerraSAR-X Earth observation satellite, whose data are used by the German Ministry of Defense to construct 3D models used in simulation or weapons systems.
“Without a ban, this knowledge would flow to China and contribute to China’s armament,” according to the document quoted by DPA.
The German company is also involved in 5G technology development and would not be deemed a reliable partner by Berlin if it fell under the control of a Chinese defense company.
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