German new takeover code unlikely to put brake on Chinese auto sector deals
Economic Times quoted People close to the matter as saying that several German companies in talks with potential buyers from China are pushing ahead with negotiations undeterred by Germany's new takeover code. Germany has become the first European Union country to tighten its rules on foreign corporate takeovers following a series of Chinese deals giving access to Western technology and expertise.
The new regulations will allow the German government to block takeovers if there is a risk of critical technology being lost abroad. They will take effect shortly with no need for parliamentary approval.
Sources said that four German firms catering to the auto industry FFT, Eisenmann, ZF Body Controls and Eissmann Automotive are currently talking to potential Chinese buyers, but do not expect political interference.
A banker familiar with the deals said that "These assets are not the type of technologically critical assets that Germany wants to protect. If the state were to start interfering in these kinds of deals, that would be the end of dealmaking in Germany."
FFT, a maker of manufacturing facilities for car makers owned by private equity investor Aton, has attracted first round offers from Chinese bidders such as Shanghai Electric in a Morgan Stanley-led deal, people close to the matter said.
The company may reap a valuation of roughly half a billion euros or 8 to 9 times its expected 2017 core earnings of about 60 million euros ($68.5 million).
The deal is expected to come at a lower valuation than what Midea paid for robotics maker Kuka last year.
While both groups make car production gear, FFT specialises on assembly lines but does not supply robots itself, weighing on the valuation, the people said.
ZF Friedrichshafen is also in the final stages of talks with one Chinese bidder on the sale of its USD 1 billion Body Controls unit, which it put on the block last year, according to sources familiar with the situation.
Separately, German car interior maker Eissmann Automotive, which is being marketed by Lazard, has caught the eye of a number of Chinese firms, people close to that deal said.
Source : Economic Times