China Warns U.S. Against Blocking Aixtron Takeover

FRANKFURT—China cautioned U.S. President Barack Obama against blocking the takeover of Germany's Aixtron SE by a Chinese investor, insisting it was a "normal commercial" acquisition despite national-security concerns about the deal.

Aixtron shares fell Friday on a media report that Mr. Obama would uphold a decision by regulators to block the €670 million ($711 million) takeover of Aixtron by the German unit of China's Fujian Grand Chip Investment Fund LP. In early afternoon trading in Europe, the shares were down 5%, having earlier been 7% lower.

"Given that it's a normal commercial M&A, it should be handled according to commercial principles and market rules," a spokesman for China's foreign ministry said.

The German technology firm said last month it was informed by the Committee on Foreign Investment in the U.S.—the agency that vets global deals on national-security grounds—about unresolved security concerns about the deal. Germany's economics ministry on Oct. 21 withdrew approval for the deal, sparking a diplomatic spat with Beijing.

Aixtron produces several high-tech products, but defense analysts say China is particularly interested in its semiconductor technology. Aixtron counts a range of manufacturers and defense companies among its customers.

People familiar with the work of the CFIUS suspect that a new semiconductor technology based on gallium nitride, or GaN, may be the focus of security concerns.

U.S. officials weren't immediately available for comment.

A spokesman for Germany's economics ministry said U.S. proceedings were separate to its own review of the deal.

A spokesman for Aixtron said the company expected a decision to be announced Friday, but had so far received no further information from U.S. officials.

Germany has been the top European destination for Chinese investors in 2016. Chinese companies have bought German companies at the rate of about one a week since January, according to data provider Dealogic. Chinese companies have spent over $11 billion on German companies this year, eclipsing the previous record of $2.6 billion in 2014.

Andrea Thomas in Berlin contributed to this article.

Write to Josh Chin at [e-mail]

(END) Dow Jones Newswires

December 02, 2016 09:05 ET (14:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.