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Germany mulling protecting firms from foreign takeovers

Published: October 16, 2016, 2:43 pm

    The German Economy Ministry has expressed concern over take-overs of German high tech companies.

    They say companies should be shielded from unwanted takeovers, especially from state-owned and partly state-owned companies in non-European countries.

    A German newspaper Welt am Sonntag (WamS) reported on Sunday that deputy Economy Minister Matthias Machnig had sent out directives to members of the German government containing six key points for reviewing investment at the European Union level.

    The directive seeks to limit company acquisitions by investors in non-EU countries, the newspaper said.

    The issue of foreign takeovers has come to the fore in Germany with Chinese home appliance maker Midea buying German robot maker Kuka as well as Chinese chipmaker Sanan Optoelectronics expressing interest on Monday in German lighting group Osram in a potential acquisition or cooperation deal.

    Asked about the newspaper report, a spokesman for the Economy Ministry said he would not comment on internal government working papers.

    “Minister (Sigmar) Gabriel has, however, repeatedly made clear that he would like to sound out options – also at the European level – to make fair competition possible, especially in international competition with state-subsidized foreign companies, and at the same time to remain open for investment,” the spokesman said.

    Chinese companies are on course to set record investment levels in Germany this year, fueling concerns about the country losing innovative and technologically advanced companies.

    According to data provider Dealogic, Chinese investors have sought to acquire German companies at a rate of roughly one a week since the start on 2016, offering a record $9.1 billion for those, well beyond the $2.6 billion spent in 2014.

    They have offered to buy 24 companies, less than six months into 2016, while 28 German acquisitions were recorded in 2014. China’s rising labor costs and shifting demographics, which have slowed domestic growth, explain the surge.

    Some forms targeted by the Chinese are considered pivotal to Germany’s manufacturing and engineering ambitions and crucial in a national initiative to digitize manufacturing and link factories to consumers via the internet, called Industrie 4.0.

    The Wall Street Journal reported that these acquisitions coincide with European industry complaining about difficulties in doing business with China.

    The European Union Chamber of Commerce in China, representing 1,600 companies, said in June that the environment is becoming more less friendly towards foreign companies, while domestic competitors find it easier to do business.

    Daniel Bauer, spokesman for SdK, a German investor-protection association, told the WSJ: “We completely open up our markets, but the Chinese don’t open theirs to us. That could prove fatal in the long run.”

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