China Daily (Hong Kong) - - BUSINESS -

the amount that Grand Chip was will­ing to spend to buy the Ger­man chip equip­ment maker

China has be­come hostage to grow­ing pro­tec­tion­ism in over­seas merg­ers and ac­qui­si­tions, ob­servers said, after the im­plo­sion of yet another Chi­nese bid due to po­lit­i­cal ob­struc­tion.

China’s Fu­jian Grand Chip In­vest­ment Fund LP has con­firmed its with­drawal from its planned deal to take over Ger­man chip equip­ment maker Aix­tron SE, after the United States pro­hib­ited the ac­qui­si­tion, cit­ing “se­cu­rity con­cerns”.

Grand Chip In­vest­ment GmbH, the trans­ac­tion ve­hi­cle of the Chi­nese bid­der, said the of­fer has lapsed fol­low­ing a US pres­i­den­tial or­der last Fri­day to re­ject the in­clu­sion of Aix­tron’s US unit in the pro­posed takeover, ac­cord­ing to a pre­pared state­ment from Aix­tron.

The Ger­man firm on the brink of bank­ruptcy had ini­tially said the US block­age would not af­fect the rest of the deal. Both Aix­tron and Grand Chip de­clined to elu­ci­date why the bid fi­nally fell apart, when ap­proached by China Daily.

The 670 mil­lion euros ($711 mil­lion) of­fer an­nounced in May had been an op­por­tu­nity for profit growth and ex­pan­sion of the work­force, Aix­tron said on its web­site. But with the deal com­ing to a close, it has to seek lo­cal gov­ern­ment sup­port or oth­er­wise face se­vere job cuts, its CEO Martin Goet­zeler told Ger­man news­pa­per Han­dels­blatt.

China’s For­eign Min­istry crit­i­cized the US’ “un­founded ac­cu­sa­tions” and the politici- za­tion of what was sup­posed to be a “purely com­mer­cial be­hav­ior”.

“We hope that the US side can stop mak­ing un­founded ac­cu­sa­tions about Chi­nese com­pa­nies and pro­vide a level play­ing field and convenience for Chi­nese com­pa­nies’ in­vest­ment,” said For­eign Min­istry spokesper­son Lu Kang ear­lier this week.

Chi­nese firms are start­ing to en­counter hos­til­ity and xeno­pho­bia when they ven­ture abroad, said Ling Xiao, part­ner of Hui Ye Law Firm spe­cial­iz­ing in in­vest­ment and fi­nanc­ing.

The Aix­tron deal was scru­ti­nized by the Com­mit­tee on For­eign In­vest­ment in the United States, an in­ter­a­gency task force that con­ducts na­tional se­cu­rity re­views of for­eign di­rect in­vest­ment.

“Wash­ing­ton re­lies heav­ily on the CFIUS to run a thor­ough as­sess­ment of po­ten­tial buy­out deals. Na­tional se­cu­rity rea­sons are of­ten stated as the rea­son to veto in­vest­ment from China,” Ling said.

An an­nual re­port of the CFIUS pub­lished this Fe­bru­ary showed a sub­stan­tial uptick — 52 per­cent year-on-year — of trans­ac­tions as­sessed last year. Among them, China led for­eign coun­tries rep­re­sented in the num­ber of re­views for the third con­sec­u­tive year.

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