US intelligence services warned Berlin that a now on-hold Chinese takeover of German semiconductor equipment maker Aixtron (AIXGn.DE) could give Beijing access to technology that could be used for military purposes, business daily Handelsblatt said.
The German economy ministry said on Monday it had withdrawn its approval for Fujian Grand Chip Investment Fund (FGC) to buy the Aachen-based firm for $732 million, citing previously unknown security-related information.
The ministry declined to comment further in light of the Handelsblatt report on Wednesday.
Aixtron shares dropped 6.5 percent to a five-month low OF 4.83 euros by 0705 ET, well below the 6 euros per share that FGC had offered shareholders for their stock.
The newspaper, citing German intelligence sources, said US authorities had shown representatives of German ministries evidence last Friday, at a meeting at the US embassy in Berlin, although they refused to hand it over.
Concern is growing in Berlin about losing key technology to China after a string of Chinese acquisitions of German companies including flagship robot maker Kuka (KU2G.DE). Aixtron sells its equipment, which is used to deposit chemical layers on silicon wafers, mainly to LED chipmakers. It is not designed for military purposes but analysts say it could be adapted, with some difficulty. The US Committee on Foreign Investment in the United States (CFIUS), which reviews takeovers from a national security perspective, in January blocked a plan by Dutch Philips (PHG.AS) to sell its Lumileds LED business to Chinese buyers.Security concerns prompted Germany to reopen review of Chinese takeover of Aixtronhttps://t.co/1xDOkETRYK ?
— Wall Street Journal (@WSJ) October 25, 2016
Germany has come a long way from naive trust in China till ~7yrs ago https://t.co/sgDqqLR0bS— Arvind Virmani (@dravirmani) October 24, 2016
Review of the Chinese bid to take months
A German Economy Ministry review of a Chinese takeover bid for chip equipment maker Aixtron will likely take several months, a ministry spokeswoman said on Wednesday, declining to give details on why it withdrew clearance for the deal.
The ministry first needs to collect all necessary documents pertaining to the review, the spokeswoman told a regular government news conference in Berlin.
Once these have been handed it, the review process will likely last two to three months, she added.
She declined to give details on the origin or type of "new security information" that had lead to the ministry withdrawing its approval for FGC to buy the Aachen-based firm for $599.51 million.
German push grows for Chinese investment curbs. Aixtron transaction put on hold after intervention of US government https://t.co/4zmYChbGVR
— Thorsten Benner (@thorstenbenner) October 26, 2016
