The test threshold for company takeovers should be reduced

The shopping tour of Chinese investors in Europe is causing discussion. Now, according to a media report, the federal government has agreed on how it can more easily examine takeover plans and stop them if necessary.

The federal government wants to control the takeover of German companies by investors from countries outside the EU more strictly. After months of negotiations, the coalition agreed on a draft law that should be passed at the cabinet meeting on Wednesday, reported the "Handelsblatt".

Examination possible from acceptance of ten percent

The core of the amendment to the Foreign Trade and Payments Ordinance is therefore a lowering of the threshold above which the Federal Government can examine and, if necessary, prohibit the acquisition of shares by an investor outside the European Union. So far, this threshold has been a company share of 25 percent. According to the bill, it should drop to ten percent. This step goes beyond the previous plans of Federal Minister of Economics Peter Altmaier, who originally set 15 percent as a target.

The future threshold of ten percent expressly relates only to companies in security-relevant areas. These include defense and the so-called critical infrastructures such as energy suppliers, rail, road or data networks. Food producers can also fall under the regulation if they exceed a certain size. The list of security-relevant companies should be expanded to include media companies in the course of the reform, reported the "Handelsblatt".

In response to a dpa request, the Federal Ministry of Economics only confirmed that the amendment to the Foreign Trade Ordinance "should soon be in the cabinet". The ministry did not provide any further information on the content.

Response to actions by Chinese investors

In the past few months, the takeover plans of Chinese investors in particular had repeatedly sparked discussions. The aim of the pending new regulation is that the federal government can have a say at an earlier stage as to whether Germany’s legitimate security interests could be affected.

In November the EU agreed on a far-reaching system for examining foreign investments in Europe. The states are focusing primarily on Chinese companies. The People’s Republic is accused of specifically strengthening its industry through takeovers in key sectors. This year, the federal government prevented an investor from China from buying a 20 percent stake in the electricity grid operator 50Hertz. The government also wanted to oppose the takeover of the Westphalian mechanical engineering company Leifeld veto, but the Chinese prospect withdrew because of the political concerns.

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