BERLIN (Reuters) - Berlin signalled on Wednesday that it was prepared to use its new power to veto foreign takeovers of German companies in the case of a Chinese bid for toolmaker Leifeld.
Earlier on Wednesday Leifeld’s majority owner Georg Koffler told Reuters that China’s Yantai Taihai had dropped its attempt to buy the company ahead of an expected veto by the German government.
The German government tightened controls on foreign investments last year after a series of high-profile takeovers by Chinese firms fuelled concern over the security implications of China’s growing appetite for European high-tech firms.
“The cabinet today decided to grant authorisation for a veto,” a government source said. “This authorisation allows for vetoing the purchase of a domestic company by a foreign company for security reasons.”
Leifeld, a maker of metalworking tools that are crucial in the nuclear power sector, is typical of the technically advanced “Mittelstand” manufacturing firms that underpin Germany’s success as a global export powerhouse.
Koffler criticised Berlin’s willingness to intervene, saying the security concerns about letting China’s Yantai buy into Germany’s nuclear industry were overblown.
“We believe these security policy concerns are unjustified,” he said. He said the company would pursue a partial flotation of its shares this year as an alternative to the sale originally planned.
Across Europe, authorities are looking warily at bids by Chinese firms for the kinds of advanced manufacturers that underpin the continent’s relative prosperity compared to lower-value emerging-market economies.
Last month, a German state bank bought a stake in high-voltage grid operator 50Hertz to prevent China’s state grid acquiring the shareholding and promised to consider ways of better protecting companies from foreign acquisition.
The head of Germany’s domestic intelligence service also warned that Chinese state actors seeking trade secrets could be behind bids that nominally came from private firms, highlighting a seeming correlation between a decline in hacking attempts originating from China with an increase in bids.
Writing by Thomas Escritt; Editing by Joseph Nasr and Raissa Kasolowsky