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HomeFT SelectFujian drops Aixtron offer after US blocks deal

Fujian drops Aixtron offer after US blocks deal

China’s Fujian Grand Chip Investment said it had dropped its offer for Aixtron, the German chip equipment maker, six days after President Barack Obama blocked the deal on national security grounds.

Fujian’s takeover vehicle Grand Chip Investment said its offer had lapsed because it had failed to gain regulatory approval from the US Committee on Foreign Investment.

Aixtron’s shares fell more than 4 per cent to €3.73 in Frankfurt.

Aixtron said last month that it had been informed by Cfius that it had security concerns about GCI’s takeover of the German company and its US subsidiaries. Its technology is being used to upgrade both US and foreign-owned Patriot missile defence systems.

Then last Friday, Mr Obama issued a presidential order saying there was “credible evidence” that the Chinese investors behind GCI “might take action that threatens to impair the national security of the United States”. He did not offer any further details.

The takeover had been in trouble even before the Cfius intervention. In October, the German government abruptly withdrew its clearance of GCI’s takeover and reopened a review into the transaction.

The move came after US intelligence services tipped Berlin that chips produced using Aixtron’s equipment could be used in China’s nuclear programme. The information was presented at briefings attended by senior German officials in the US embassy in Berlin.

The volte-face over Aixtron reflects a growing protectionist backlash against Chinese investment in Germany. Sigmar Gabriel, the economics minister and deputy chancellor, backs a proposal to restrict foreign takeovers of EU companies if they involve “key technologies”.

This is not the first time Cfius has intervened to block a transaction involving a Chinese company. Earlier this year, Philips, the Dutch technology group, terminated a $3.3bn deal to sell its US-based Lumileds lighting division to a Chinese-backed private equity fund due to opposition from Cfius.

Similarly, Unisplendour, a subsidiary of China’s state-owned Tsinghua Holdings, abandoned its $3.8bn bid for a stake in Western Digital, a US data storage company, after it became clear that Cfius would conduct a review.

Via FT