Germany rescinds approval for Chinese takeover of Aixtron

Approval for the EUR670m takeover of German chip equipment maker, Aixtron, by a group of Chinese investors has been withdrawn by the German government after concerns were raised about China’s desire to buy up crucial German industrial and technology companies.

The withdrawal of German government consent for the takeover of Aixtron by a Chinese consortium, led by the Fujian Grand Chip Investment Fund, caused the chip equipment maker’s shares to fall 13% late yesterday on the Frankfurt exchange, according to the ‘FT’.

The plunge in Aixtron’s share price to below the EUR6 per ordinary share takeover offer, which initially valued the company at EUR670m, was lessened somewhat in later trading but the company’s valuation continues to fluctuate in volatile trading as news of the German government’s protectionist move spread.

Matthias Machnig, deputy economics minister, told the German newspaper ‘Die Welt’ that the government had decided to take back the clearance certificate it had originally issued last month and reopen a review of the deal after receiving “previously unknown security-related information”.

A clearance certificate had been issued on September 8 stating the German government had no objections to the deal, but this has now been rescinded and a new review announced.

There is a growing fear about Chinese investment in important German companies, intellectual property (IP) losses and lost control in Germany. For instance, Sigmar Gabriel, the economics minister and deputy chancellor in the country, has already backed a proposal to restrict foreign takeovers of European Union (EU) companies if they involve “key technologies that are of particular importance for further industrial progress”. Most such advanced EU companies are German.

Under current rules on its website, the German economics ministry can review any deal where non-EU investors acquire at least 25% of the voting rights of a German company, and block it if it “poses a threat to Germany’s public order or security”.

German concerns about Chinese takeovers have been exacerbated by the EUR4.5bn takeover earlier this year of innovative robot maker, Kuka, by China’s Midea.

In the first half of this year Germany became the top destination for Chinese deal-makers in Europe with a record $10.8bn invested according to ‘EY’, which also reported Chinese investors had acquired 37 German companies in H1 2016 versus 39 in the whole of 2015.

The pros and cons of protectionist measures versus the need to maintain the advances of globalisation, while sharing its bounty more equally, has also been a key theme during the US presidential elections. The implicit acceptance of the ‘rightness’ of globalisation may be on the wane in today’s global economy, although its adherents are of course fighting back.


“Re-visiting decisions based on unspecified and newly-identified “security” concerns sounds like political cover for a populist headline,” said Daniel Domberger, a partner at Livingstone, a debt and M&A advisory firm, in response to the news from Germany.

“Another layer of regulatory uncertainty is unhelpful,” he continues. “The Eurozone needs to be stimulating growth, not deterring investment. But I expect to see more stories like this, even though Chinese acquisitions count for a tiny proportion of the deals done in Germany.”

According to Domberger there were 26 acquisitions of German companies by Chinese and Hong Kong acquirers in 2014; but only 14 in 2015, so the rate does fluctuate. “Admittedly, volumes have picked up again this year,” he said, “but in the context of the 750-850 deals done in Germany each year, roughly half domestic and half with international buyers, Chinese acquisitions account for only 1 in 20 or even 30 German sales to foreign buyers. This is political noise, not a real trend.”


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