Germany’s Chinese takeover regulations could have a downside

on Aug23

The headquarters of chip equipment maker Aixtron is pictured in Herzogenrath, western Germany on October 25, 2016.

Oliver Berg | AFP | Getty Images

The headquarters of chip equipment maker Aixtron is pictured in Herzogenrath, western Germany on October 25, 2016.

For many firms, tighter regulations are an infringement by the state on the free market and simply block much-needed investment.

“I’m wondering how many companies need protection,” Kim Schindelhauer, chief executive of Aixtron, told CNBC. “We are talking here about global companies who do huge amounts of business overseas.”

Aixtron was the subject of a high profile $728 million Chinese takeover bid in 2016. The purchase of the semiconductor manufacturer by Fujian Grand Chip Investment Fund fell through, however, after the sale of its U.S. arm was blocked on security grounds similar to those later brought in in Germany.

“We, Aixtron, do not need protection: we wanted the deal,” he said, noting half of Aixtron’s revenues are generated in China. “We need the funding for research and development. Technology companies need that and European bodies certainly aren’t going to provide it.”

Experts are also concerned that Germany’s hardened stance could result in efforts by Chinese investors to circumvent the rules and access core intellectual property via partner firms outside of Germany.

“The implementation of tighter restrictions on foreign takeovers … may lead to a higher Chinese interest in buying companies from Central Europe operating as sub-vendors to German companies,” Rodl & Partners’s Wiehl said.

“This would be another possibility at gaining access to German know-how.”



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