Germany blocks Chinese takeover of satellite firm on security concerns - document (updated)

Air Industries

08/12/2020 14:22

* Berlin views target company as crucial for security
    * Firm IMST is supplier of Germany's armed forces
    * China urges Germany not to engage in protectionism

 (Adds details of document, reactions)
    By Michael Nienaber
    BERLIN, Dec 8 (Reuters) - Germany has blocked the takeover
of satellite and radar technology firm IMST by a subsidiary of
state-controlled missile maker China Aerospace and Industry
Group (CASIC) due to national security concerns, a government
document showed on Tuesday.
    The move comes amid increased tensions between Germany and
China, whose trade ties have become very close in the past
decade, over unfair competition caused by state-backed
enterprises and restrictions on market access.
    Berlin views IMST as an important provider of satellite
communication, radar and radio technology, and its know-how is
crucial for national security, according to the government
document seen by Reuters.
    IMST's expertise is also needed for the construction of
critical infrastructure in the future, including 5G and 6G
networks, the document said.
    "IMST is also an important partner of the German Aerospace
Center (DLR). In various cases, IMST's products and services
were also the subject of deliveries to the Bundeswehr armed
forces," it said.
    A German economy ministry spokeswoman declined to comment on
company names, but said the cabinet had authorized the ministry
in a closed-door meeting to screen and block a foreign
investment by a non-European investor on the grounds that the
step could pose a threat to national security.
    The Chinese foreign ministry said in a statement it had no
knowledge of the case, but added that the government had always
encouraged Chinese companies to carry out "mutually beneficial"
investment cooperation overseas.
    "We hope that countries including Germany will provide
Chinese companies that are operating normally with a fair, open
and non-discriminatory market environment, and not politicize
normal economic and trade cooperation, (or) use 'national
security' as a pretext to engage in protectionism," it added.
    A spokeswoman for IMST, based in the western town of
Kamp-Lintfort in North Rhine-Westphalia, declined to comment.
CASIC was not immediately available for comment. 
    Germany has lowered the threshold for screening and even
blocking purchases of stakes in German firms by non-Europeans in
a move to fend off unwanted takeover attempts mainly by
state-backed Chinese investors in strategic areas.
    Under the new rules, Berlin can intervene on grounds of
public interest if a non-European investor buys a 10% stake in a
company, sharply reducing the threshold from 25%.
    The German government has foiled a handful of Chinese deals
or takeover attempts, including a proposed takeover of German
toolmaker Leifeld by Yantai Taihai and a bid by China's State
Grid for a stake in power grid operator 50Hertz in 2018.
    In August, the government rejected a bid by China's Vital
Materials Co to buy PPM Pure Metals due to concerns about the
target company's sales to the German military, according to
people with knowledge of the matter.  urn:newsml:reuters.com:*:nL4N2FF409

 (Reporting by Michael Nienaber; Additional reporting by Ryan
Woo in Beijing; Editing by Caroline Copley and Jan Harvey)
 ((michael.nienaber@thomsonreuters.com; +49 30 2888 5085;
Reuters Messaging: michael.nienaber.reuters.com@reuters.net
www.twitter.com/REUTERS_DE www.reuters.de))