M&A security

Britain to tighten foreign takeover rules amid China worries

Britain is planning the biggest change to takeover rules in almost two decades, giving the government new powers to block deals in all sectors of the economy to prevent UK companies in sensitive industries from falling into foreign hands.

The business minister, Greg Clark, wants to tighten the existing rules, which are limited to large transactions, to cover all British companies including small firms.

The changes mark a new era of government oversight of business activity in the world’s fifth-largest economy which has traditionally been one of the most open markets to global mergers and acquisitions.

It comes amid a boom in global merger and acquisition activity in which Britain has remained the second most popular target nation for deals behind the United States. About $277 billion (£210.7 billion) of offers for UK firms were announced in the first six months of the year, according to Thomson Reuters data.

M&A security

Trump Blocks Broadcom Takeover of Qualcomm on Security Risks

President Donald Trump issued an executive order Monday blocking Broadcom Ltd. from pursuing its hostile takeover of Qualcomm Inc., scuttling a $117 billion deal that had been scrutinized by a secretive panel over the tie-up’s threat to U.S. national security.

Trump acted on a recommendation by the Committee on Foreign Investment in the U.S., which reviews acquisitions of American firms by foreign investors. The decision was unveiled just hours after Hock Tan, the chief executive officer of Singapore-based Broadcom, met with officials at the Pentagon in a last-ditch effort to salvage what would have been the biggest technology deal in history.

"There is credible evidence that leads me to believe that Broadcom Ltd.," by acquiring Qualcomm, "might take action that threatens to impair the national security of the United States," Trump said in the order released Monday evening in Washington.

M&A security

Foreign takeovers: Does Britain think Chinese companies threaten its national security?

British companies could receive added protection from foreign takeovers under new government proposals – just months after Theresa May cast doubt on a nuclear-power-station deal with China. The proposals have been presented as being “in the interests of national security.”

May suspended progress on a nuclear-power plant being built in Somerset, in which the Chinese had a central role. China General Nuclear (CGN) agreed to take a 33-percent stake in £18-billion ($23.8-billion) Hinkley Point C project, alongside French firm EDF.

However, progress on the project was paused by May in one of her early acts as Prime Minister in order to allow closer examination of the details.

CGN was “delighted” that Theresa May eventually agreed to the partnership, but the new proposals seem to indicate that something got her spooked.

M&A security

US intel agencies behind Berlin’s U-turn on Chinese takeover of German firm – report

US intelligence has compelled Berlin to stop a $730 million Chinese acquisition of a Germany-based tech company over alleged concerns that its high-end products had “military applications” and might benefit Beijing’s nuclear program, Handelsblatt reports.

The German Economy Ministry announced on Monday that it had canceled its approval for China’s Grand Chip Investment Fund (FGC) to purchase the Aachen-based high-tech company Aixtron for $732 million (€670 million), citing “security-related information” that emerged. A review of the deal is pending.

US secret services were behind the unexpected decision, Handelsblatt newspaper reported on Thursday, citing sources within the German intelligence community. 

According to the report, during a meeting at the US embassy in Berlin, American officers showed German government officials evidence that Aixtron’s technology also has “military applications,” although they had refused to hand the evidence over.

M&A security

Cyber Espionage Fears Stoked by China’s Zoomlion Bid for Terex

Mistrust of China and wariness about its cyber spying are fueling a public policy campaign to halt a corporate acquisition involving a U.S. defense contractor. 

The debate surrounding an unsolicited bid by China’s industrial equipment manufacturer Zoomlion to acquire Connecticut-based Terex Corp. has turned into a microcosm of deeper foreign policy and security issues. The potential acquisition is drawing increased attention in Washington and stirring speculation about China using its industrial and financial clout to gain leverage against the United States. 

Members of Congress have urged the U.S. government to scrutinize the deal because of Zoomlion’s ties to the Chinese government and the People’s Liberation Army. Security concerns aside, opposition to the deal also is motivated by business reasons, as Zoomlion’s offer has disrupted Terex’s merger with Finland’s Konecranes. The European firm was in the midst of merging with Terex before Zoomlion come in with a bid, and talks were suspended as Terex leaders weigh their options.

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