Germany plans fund to thwart unwanted foreign takeovers: report
26 March 2019
Germany is planning to create a sovereign fund that would effectively ward off foreign takeovers of key German enterprises, in a marked shift from its “hands-off” policy on business dealings.
Presenting the national industry strategy for 2030 at a news conference in Berlin in February, German economy minister Peter Altmaier said the government plans to pass legislation by the end of 2019 to create a state-owned fund that can protect key companies from takeovers by Chinese and other foreign firms.
Altmaier proposed the fund in February as part of a more defensive industrial strategy.
According to a Reuters report that cited German government officials, the government is now working on draft laws so as that the fund would be running next year.
The proposed fund, when created, would work with the private sector when buying company stakes to foil unwelcome takeovers, the report quoted unnamed senior government officials as saying.
According to the Reuters report, the state-owned investment fund will work with private sector by initially buying a stake and then selling it to private investors within the country or by working with private investors from the start.
“In the past, Germany was too reluctant to define its national interests. This is changing now,” the first government official said.
“We see that we cannot lean back anymore and let everything be decided by the free play of market forces,” he said. “And this means more protection from the state.”
Germany’s transformation from a market-driven economy to a policy-led one cones in response to China’s emergence from a customer to a competitor and US President Donald Trump’s threats of unilateral trade sanctions and higher tariffs, says the report.
The European Commission has urged member countries f the European Union to back its ideas to curb raids by Chinese companies.
Within the EU also the bloc is reconsidering its industrial strategy and relations to suit individual countries and ward off attacks by increased investment in critical sectors, especially by Chinese state-owned enterprises.
Under the present conditions where individual states direct the course of businesses, Germany finds it difficult to continue free-market policy it has been following from the time of post-war economy minister Ludwig Erhard.