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Bloomberg
Chancellor Angela Merkel’s government for the first time vetoed a possible Chinese takeover of a German company, signalling a toughening stance toward investments from the country.
Merkel’s Cabinet voted to block the potential purchase of German machine tool
manufacturer Leifeld Metal Spinning AG Chinese company Yantai Taihai Group, according to person familiar with the matter who declined to be identified because the decision has not yet been announced. The government took the precautionary measure even though Yantai Taihai indicated at the last minute that it will withdraw its offer, the person said.
The decision follows an Economy Ministry review examining possible negative
impacts of the sale that concluded 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.
Germany is joining the US and Canada in taking a tougher line on China. Merkel’s government swooped in 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. The Economy Ministry is also looking at further tightening rules on foreign investments in the country from outside the European Union.
The Economy Ministry said last week it may seek to lower the 25 percent stake threshold for examining a foreign takeover. The German domestic intelligence service said in July that Chinese acquisitions of high-tech companies in Germany represent a potential national-security threat.
The German government already last year tightened rules for foreign investors after high profile acquisitions by Chinese corporations — such as the Midea Group Co. purchase of robot maker Kuka AG in 2016 — prompted a public backlash. A Chinese takeover of semiconductor-equipment maker Aixtron SE failed due to US opposition.
The depth of German concern is evident in the government taking action to stop the sale of a relatively small business. Leifeld, owned by the holding company of a former German media executive, had $39 million in revenue and 5.2 million euros in earnings before interest, taxes in 2016.