As the German government is trying to prevent German companies in strategic industries from being acquired by foreign investors, especially from China, we take a look at some prominent takeovers from recent years.Germany continues to be a favorite destination for Chinese investors. According to Berlin-based Mercator Institute for China Studies, foreign direct investment (FDI) in Germany started soaring in 2015 and hit a record of 11 billion euros ($12.6 billion) of completed deals last year. This makes Germany the largest recipient of Chinese FDI in Europe.
In the light of the German government tightening takeover rules to shield ‘critical’ businesses from foreign investors, especially technology and advanced manufacturing assets, here are some examples of Beijing buying up Germany’s famed “hidden champions” of mid-sized companies.
Chinese appliance manufacturer Midea’s purchase of German robot manufacturer Kuka for 4.4 billion euros was by far the largest transaction last year. As German daily Süddeutsche Zeitung reported, the German government’s plan to veto the sale of critical technology is a direct response to the Kuka takeover.
In early 2016, Beijing Enterprises acquired waste incineration and power generation company EEW Energy for 1.4 billion euros. At the time of the takeover, EEW employed 1,050 workers, turned up to 4.7 million tons of waste into energy annually with its 18 plants and produced heating and electricity for about 700,000 households.
In 2015, China’s foreign direct investment in Germany started soaring. This rapid increase of technology acquisitions made the German government change its traditionally non-confrontational approach in its economic diplomacy toward China. Last year, for instance, it cancelled its initial approval of a Chinese takeover of semiconductor equipment maker Aixtron, a deal that was later shut down by the US government. Overall, foreign buyers took over a record number of 873 German companies last year.
The acquisition of Munich-based industrial machinery maker KraussMaffei Group for 925 million euros by China National Chemical Corporation was the fourth-largest Chinese investment in Germany in 2016. ChemChina, the country’s largest chemical company, employs 140,000 people and boasts annual revenues of roughly 37 billion euros.
Putzmeister, a 59-year-old maker of pumps for concrete, was bought by its Chinese competitor Sany for 360 million euros in 2012. In spite of initial fears about job losses among workers, Putzmeister, whose name means “plaster master,” saw sales grow by nearly a third since the takeover.
In October of last year, China’ sovereign wealth fund CIC invested one billion euros in German property group BGP. The transaction was the first major Chinese investment in German homes. According to Reuters, CIC and its co-investors beat out German property groups Vonovia and Deutsche Wohnen in the auction for BGP.