The German government has withdrawn its approval for a Chinese takeover of chip equipment maker Aixtron, throwing up an unexpected hurdle for a €670 million deal on the home stretch.
The government had cleared the deal on September 8th, but Aixtron said on Monday that the economy ministry had now withdrawn the clearance certificate for China's Fujian Grand Chip Investment Fund LP (FGC), a Chinese investment fund controlled by businessman Zhendong Liu, and planned to reopen a review of the takeover.
Aixtron did not say why the government had reversed its decision and the economy ministry was not immediately available for comment.
A number of bids by Chinese investors for German companies has prompted the German government to consider whether it needs to do more to protect key technologies.
Shares in Aixtron, which makes machines that are key for the production of red, blue, green and white light-emitting diodes (LEDs), were down 7 per cent at €5.40 earlier, well below FGC’s offer price of €6 per share in cash.
Overcapacity
Aixtron executives have backed FGC's offer, which ended on Friday. The German company has been trying to return to profit in the face of overcapacity and wrestle back leadership of the global market for LED chip-making equipment from US rival Veeco Instruments.
Aixtron executives have warned that the company's only alternatives to the deal with FGC would be to keep investing its scant funds in new technology in hopes of a recovery of demand, or to shrink its business and its workforce. "It is unclear whether the German ministry has new insights which might have led to the reopening of the review," DZ Bank analyst Harald Schnitzer said.
German economy minister Sigmar Gabriel called in June for a Europe-wide safeguard clause which could stop foreign takeovers of firms whose technology is deemed strategic for the future economic success of the region.
Rising Chinese interest in German companies has caused some concern in Germany, where firms have long complained of obstacles to investment and acquisitions in China.
Deals include Chinese household appliance manufacturer Midea's acquisition of German industrial robot maker Kuka for €4.5 billion this year. Chinese chipmaker Sanan Optoelectronics has also said it had been in contact with lighting group Osram about a potential acquisition or co-operation deal. – (Reuters)
