Germany withdraws approval of Chinese takeover of technology company Aixtron

The German government yesterday withdrew its approval for the acquisition of local chip equipment maker Aixtron SE by Chinese firm Fujian Grand Chip Investment Fund without giving any reasons for reversing its decision.

Aixtron, based in Herzogenrath, Germany, specialises in manufacturing metalorganic chemical vapour deposition equipment, for clients in the semiconductor industry.

Aixtron yesterday said in a release that the ''German Federal Ministry of Economics and Energy has withdrawn vis--vis Fujian Grand Chip Investment Fund LP, as indirect shareholder of Grand Chip Investment GmbH, its Clearance Certificate issued on September 8, 2016 and announced a reopening of review proceedings in connection with the takeover offer by Grand Chip Investment GmbH.''

In late May, Fujian Grand Chip.  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 will continue 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's CEO, Martin Goetzeler and COO Bernd Schulte will continue to run the company post acquisition.

As of Friday evening, Grand Chip recieved about 65 per cent of Aixtron shares, well above the 50.1 per cent threshold it had set for completing the deal.
Matthias Machnig, deputy economics minister, told German newspaper Die Welt that the government had withdrawn the approval and will reopen a review of the deal after receiving ''previously unknown security-related information.''

Under German law, the government can block takeovers if it decides that the deal could harm energy security, defence or financial stability.

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.

Gabriel had even unsuccessfully sought to form an alliance of German or European companies to table a counter offer in order to prevent Kuka being sold to Midea Group. (See: German minister seeks European counter buyout bid for industrial robot maker Kuka)

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.