Angela Merkel blocks China bid

German chancellor, Angela Merkel’s government has for the first time vetoed a possible Chinese takeover of a German company. This signals a toughening stance toward investments from that country.

Angela Merkel blocks China bid

Arne Delfs

German chancellor, Angela Merkel’s government has for the first time vetoed a possible Chinese takeover of a German company. This signals a toughening stance toward investments from that country.

Ms Merkel’s cabinet voted to block the potential purchase of German machine tool manufacturer, Leifeld Metal Spinning, by a Chinese investor, the economy ministry said in Berlin.

The government took the precautionary measure, even though Yantai Taihai Group indicated, at the last minute, that it would withdraw its offer.

An economy ministry review examined possible negative impacts of the sale and concluded that a purchase would raise national security concerns.

Leifeld — based in the city of Ahlen, in the state of North Rhine-Westphalia — is one of the leading producers of high-strength metals for the car, space, and nuclear industries.

“Leifeld produces some really top-notch machinery,” said Mikko Huotari, deputy director at the Mercator Institute for China Studies, in Berlin. “Germany is well aware of the threat” posed by the Asian country’s goal of becoming the leader in advanced manufacturing, under the so-called Made in China 2025 programme, he said. Germany is joining the US and Canada in taking a tougher line on China.

Ms Merkel’s government has been at the forefront of moves to bring in EU-wide screening of outside investments (it has been the target of Chinese acquisitions in recent years). Policy-makers are acting out of concern that China is seeking access to sensitive technology, or wants to boost its global influence by acquiring key infrastructure, including ports and electricity networks.

Since Germany tightened its measures, blocking unwanted takeovers in July, 2017, 80 deals have been probed, with a third of those involving Chinese investors directly or indirectly.

The government hasn’t used the law to block an investment since it was established, in 2004.

As part of the tougher approach, the German government swooped in last week to nab a stake in one of the country’s largest power-grid operators, thwarting an attempt by a Chinese firm to buy the holding.

Bloomberg

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