Chinese investment fund abandons Aixtron takeover after US blocks deal
08 December 2016
China's Fujian Grand Chip Investment Fund (GCI) has abandoned its takeover bid for German chip equipment maker Aixtron SE after US President Barack Obama blocked the deal.
GCI today said that its conditional offer had lapsed since it could not get US regulatory approval for the deal. GCI had been trying to buy the US subsidiary Aixtron and its German parent firm Aixtron SE,
Earlier this week Barack Obama rejected the proposed sale of Aixtron's US subsidiary to GCI over national security concerns.
GCI is owned by Chinese investors with links to Chinese state enterprises, the US Department of the Treasury said.
The department added that Obama and the federal inter-agency Committee on Foreign Investment in the US concluded that Aixtron's technology had military applications and that the country's security would be threatened by the sale to GCI.
According to Joel Espelien, senior analyst with TDG Research, the possibility of potential military uses of particular semiconductor technologies could be determined by whether they could produce chips capable of ultra-high performance or which could withstand extremely severe environments.
The president could veto acquisitions when there was ''credible evidence that the foreign interest exercising control might take action that threatens to impair national security.''
Espelien added that while the move could be seen as a blunt-force approach to the problem of protecting the US from technological threats, it was about the only tool available for policing such a fast-moving sector.
In late May, GCI, 51-per cent owned by Chinese businessman Zhendong Liu, struck a deal to buy Aixtron for €670 million ($728.89 million).
Under the terms of the deal, Aixtron would have continued to be based in Herzogenrath, maintain its three technology hubs at its German headquarters, in Cambridge in the UK, and Sunnyvale in the US.
Aixtron, based in Herzogenrath, Germany, specialises in manufacturing metalorganic chemical vapour deposition equipment, for clients in the semiconductor industry.
Chinese companies have recently targeted German companies for their superior technology and had spent around $11 billion on buying German companies this year, breaking the 2014 record of $2.6 billion.
German economy minister Sigmar Gabriel, who is also Chancellor Angela Merkel's deputy, has been opposing Chinese takeover of German technology companies and had sought the European Union (EU) approval to give powers to countries in the EU to block or impose conditions on shareholdings of non-EU companies.
Gabriel's opposition to Chinese takeovers of German tech companies after China's Midea Group acquired German robot maker Kuka AG although the deal was opposed by several lawmakers.
Some of the recent high-profile takeovers of German companies by Chinese include China National Chemical Corp's $1 billion purchase of KraussMaffei Group, a cutting-edge equipment maker that processes plastics and rubber, a consortium led by Chinese LED specialist MLS acquired Osram's lamp unit for more than €400 million, Beijing Enterprises acquired German waste management company EEW for €1.44 billion, and ChemChina agreed to buy German machinery maker KraussMaffei Group for €925 million.