Germany Pre-Empts Chinese Takeover Bid
On August 1, the German Cabinet voted to block Yantai Taihai Group’s proposed acquisition of machine tool manufacturer Leifeld Metal Spinning. Leifeld is one of the leading producers of high-strength metals for the auto, space, and nuclear industries. A July 2017 reform provides German regulators the ability to review inbound investment against a range of security-related concerns, but this is the first time those powers have actually been used to forestall a Chinese-led acquisition of a German entity.
The decision taken by Merkel’s Cabinet is the latest development in a recent toughening of the German government’s stance on China. On July 27, German state-owned bank KfW spent approximately $895 million on a 20% stake in local power distribution company 50 Hertz after Chinese power company State Grid had attempted, for the second time, to acquire a stake in that company. The government commented, “On national security grounds, the federal government has a major interest in protecting critical energy infrastructure. The citizens and business community expect a reliable energy supply.”
Concern regarding the consequences of Chinese investment in Germany began to seriously intensify in 2016, when China’s Midea Group purchased robot manufacturer Kuka AG.