Germany blocks Chinese takeover of satellite firm on security concerns: document

Germany blocks Chinese takeover of satellite firm on security concerns: document

By Michael Nienaber  

By Michael Nienaber

BERLIN (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.

(Reporting by Michael Nienaber; Additional reporting by Ryan Woo in Beijing; Editing by Caroline Copley and Jan Harvey)

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