German semiconductor equipment maker Aixtron will explore with its Chinese suitor what can be salvaged of the planned takeover after a U.S. presidential order ruled the deal posed a national security risk, the company said on Saturday.

U.S. President Barack Obama blocked China's Fujian Grand Chip Investment Fund (FGC) from acquiring Aixtron's U.S. business, the Treasury Department said on Friday.

"The bidder and Aixtron are evaluating the impact of the Order on the conditions to be fulfilled under the takeover offer and will coordinate with the German Federal Financial Supervisory Authority (BaFin) to examine the consequences of the Order on the takeover process," Aixtron said in a statement.

It added the presidential order was limited to Aixtron's U.S. business and did not per se prohibit the acquisition of Aixtron shares and American depositary shares FGC.

Aixtron has previously said that scrapping the proposed deal would mean it would have to cut costs and jobs would be at risk. </s> Obama, on Friday, is expected to uphold the Committee on Foreign Investment in the United States' (CFIUS) recommendation that Aixtron's sale to the Chinese investment fund be stopped, Bloomberg said, citing sources. bloom.bg/2geoLp4

Obama's office could not be reached for comment immediately by Reuters outside regular business hours.

In November, Aixtron said that the CFIUS told the company it would recommend that its pending takeover by Fujian be blocked.

The German firm said CFIUS, which reviews deals that may be national security risks, had told the chip equipment maker that it plans to recommend to the U.S. president that the deal be blocked due to security concerns, and that it had advised the companies to drop the deal.

The last time a president blocked a deal on national security grounds was in 2012, when Obama stopped a privately owned Chinese company from building wind turbines close to a Navy military site in Oregon, due to national security concerns.

The German government, in October, withdrew its approval for the deal.

The deal, announced in May, valued Aixtron at 670 million euros ($715.56 million).

Aixtron and Fujian Grand Chip Investment Fund could not be immediately reached by Reuters for comment. </s> China to US: Avoid politics in purchase of German semiconductor company

BEIJING — China appealed to Washington and Berlin to avoid injecting politics into the proposed takeover of a German maker of semiconductor manufacturing equipment following a report President Obama plans to oppose it as a security risk.

The proposed $740 million acquisition of Aixtron SE by Fujian Grand Chip, a semiconductor maker, is "normal business activity," said a foreign ministry spokesman, Geng Shuang.

Bloomberg News reported Obama was preparing to veto the deal, marking the third time Washington has blocked a Chinese corporate takeover on security grounds. The German newspaper Handelsblatt reported earlier that Germany was warned by U.S. intelligence that Aixtron's technology could be used for military purposes.

"Since it's a normal commercial activity, it will be carried out following the rule of markets and business," said Geng. "We hope the external parties will not over-interpret that or make any political intervention."

Chinese companies have made a multibillion-dollar string of acquisitions in Europe to obtain technology and brands including Club Med, Pirelli tires and Volvo Cars.

Many Europeans welcome the influx of money at a time when economic growth is struggling. But China faces criticism from European business leaders that they are blocked from making similar acquisitions in its state-dominated economy.

Aixtron, based in Herzogenrath, says its headquarters, research and development operations and existing technology will remain at its current sites.

The German government announced Monday it was reconsidering whether to allow the takeover. A spokeswoman cited "security-related questions" but gave no explanation.

In 2012, Obama blocked Chinese-owned Ralls Corp. from building a wind farm near a naval base in Oregon. In 1990, then-President George Bush blocked the purchase of MAMCO Manufacturing Inc., a maker of aircraft parts, by a Chinese state-owned company. </s> HERZOGENRATH (dpa-AFX) - President Barack Obama blocked the acquisition of the U.S. business of Aixtron by Grand Chip Investment GmbH (Grand Chip) and certain of its direct and indirect shareholders (together, the Purchasers), according to a statement Friday by the Treasury Department. 



The order directs the Purchasers and Aixtron to take all steps necessary to fully and permanently abandon the proposed acquisition of Aixtron's U.S. business not later than 30 days after the date of the order.



The Treasury Department said the ban follows a recommendation from the Committee on Foreign Investment in the U.S., or CFIUS, which confidentially reviews foreign acquisitions solely on national-security grounds.



'The national security risk posed by the transaction relates, among other things, to the military applications of the overall technical body of knowledge and experience of Aixtron,' according to the statement.



Grand Chip is a special purpose investment owned by investors in China, some of whom have Chinese government ownership, according to the Treasury statement. 



Aixtron makes equipment for the semiconductor industry, including Metal-Organic Chemical Vapor Deposition (MOCVD)systems used to build compound semiconductor materials. Aixtron's U.S. business includes its wholly owned subsidiary, Aixtron, Inc., which is organized and headquartered in California.



The proposed acquisition was to be funded in part by Sino IC Leasing Co. Ltd., which belongs to an industrial investment fund established by the Chinese government to develop the country's integrated circuit industry, the Treasury added.



Copyright RTT News/dpa-AFX </s> WASHINGTON — Citing a national security risk, President Barack Obama on Friday blocked a Chinese investor's proposed takeover of Aixtron SE, a German maker of semiconductor manufacturing equipment, a rare move that drew objections from Beijing and complaints that the U.S. was injecting politics into the deal.

Obama ordered Fujan Grand Chip to "fully and permanently abandon" its proposed acquisition of Aixtron SE's California-based subsidiary, Aixtron, Inc. The decision upheld a recommendation from the Committee on Foreign Investment in the U.S., which reviews foreign purchases of U.S. companies.

The decision threatens to jeopardize the larger deal, which is under scrutiny Berlin and is valued at $740 million.

In a statement issued Friday evening, the Treasury Department cited the president's power to suspend or block acquisition where there is "credible evidence that the foreign interest exercising control might take action that threatens to impair national security." Aixtron's technology has "military applications," the statement said.

It is only the third time Washington has blocked a Chinese corporate takeover on security grounds.

China had appealed to Washington and Berlin to avoid injecting politics into the proposed takeover.

"Since it's a normal commercial activity, it will be carried out following the rule of markets and business. We hope the external parties will not over-interpret that or make any political intervention," said foreign ministry spokesman Geng Shuang, shortly before Washington announced the order.

Chinese companies have made a multibillion-dollar string of acquisitions in Europe to obtain technology and brands including Club Med, Pirelli tires and Volvo Cars.

Many Europeans welcome the influx of money at a time when economic growth is struggling. But China faces criticism from European business leaders that they are blocked from making similar acquisitions in its state-dominated economy.

Aixtron, based in Herzogenrath, says its headquarters, research and development operations and existing technology will remain at its current sites.

The German government announced Monday it was reconsidering whether to allow the takeover. A spokeswoman cited "security-related questions" but gave no explanation.

In 2012, Obama blocked Chinese-owned Ralls Corp. from building a wind farm near a naval base in Oregon. In 1990, then-President George Bush blocked the purchase of MAMCO Manufacturing Inc., a maker of aircraft parts, by a Chinese state-owned company. </s> LONDON — U.S. President Barack Obama is poised to block a Chinese company from buying Germany’s Aixtron SE, people familiar with the matter said, which would mark only the third time in more than a quarter century that the White House has rejected an investment by an overseas buyer as a national security risk.

The president is expected Friday to uphold a recommendation by the Committee on Foreign Investment in the U.S. that the sale of the semiconductor-equipment supplier to China’s Grand Chip Investment GmbH should be stopped, according to the people who asked not to be identified as the details aren’t public.

Blocking the $714 million acquisition would mark the second time Obama has rejected a deal on national security grounds. The first was in 2012 when he stopped Chinese-owned Ralls Corp. from developing a wind farm near a Navy base in Oregon. Before that, in 1990 then-President George H.W. Bush stopped a Chinese acquisition of MAMCO Manufacturing Inc., an aircraft-parts maker.

The Committee on Foreign Investment in the U.S., or CFIUS, reviews purchases of U.S. companies by foreign buyers and pays particular attention to purchases of technology, especially when it has defense applications. It has a say in the Aixtron deal because the company has a subsidiary in California and employs about 100 people in the U.S., where it generates about 20 percent of its sales.

Aixtron technology can be used to produce light-emitting diodes, lasers, transistors, solar cells, among other products, and can have military applications in satellite communications and radar. Northrop Grumman Corp., a major U.S. defense contractor, is among its customers, according to a Bloomberg supply chain analysis.

The decision comes at a crucial moment for U.S.-China relations. President-elect Donald Trump has accused China of carrying out unfair trade practices that hurt U.S. workers. He has vowed to brand the country a currency manipulator and said he would impose tariffs on Chinese goods. Meanwhile, Chinese companies are investing more in the U.S. than ever. Chinese foreign direct investment in America reached a record $15.3 billion in 2015, according to Rhodium Group.

Notable investments by Chinese companies include the purchase of Smithfield Foods Inc. by WH Group Ltd. in 2013 and China National Chemical Corp.’s bid for Syngenta AG, which CFIUS cleared in August. Dalian Wanda Group Co. is expanding in Hollywood with its purchases of film producer Legendary Entertainment LLC and the second-biggest U.S. cinema operator, AMC Entertainment Holdings Inc.

CFIUS doesn’t comment on its reviews because they’re confidential. National Security Council spokeswoman Emily Home declined to comment, as did an Aixtron representative. Grand Chip didn’t immediately respond to emailed requests for comment, while the China phone number listed on its regulatory filings was disconnected.

Chinese investment in the U.S. has drawn growing concern from Capitol Hill. Lawmakers pushed the Government Accountability Office to review whether CFIUS’s scope should be expanded. Sen. Chuck Schumer, a Democrat from New York, also wrote to Treasury Secretary Jacob Lew saying that he’s concerned about the growing number of acquisitions of U.S. companies by Chinese state-owned buyers.

Schumer promised Congress would work on legislation to expand CFIUS’s oversight.

The U.S.-China Economic and Security Review Commission said last month in a report to Congress that CFIUS should be authorized to stop Chinese state-owned enterprises from acquiring U.S. companies, saying Beijing uses the firms as "a tool to pursue social, industrial and foreign policy objectives."

CFIUS determined Aixtron’s sale to Grand Chip Investment, announced in May, raised unresolved national security concerns and should be abandoned, Aixtron said Nov. 18. Aixtron and Grand Chip rejected that position and planned to continue negotiations with the government, according to the statement. By law, the U.S. president has 15 days to decide on a CFIUS matter after the panel completes its investigation and must issue an executive order to block a deal. CFIUS rulings are rarely referred to the president for a decision before being resolved in some other way.

When a deal raises security risks, the companies can try to negotiate conditions to resolve government concerns, such as a requirement that only U.S. citizens handle certain products and services. When CFIUS concerns can’t be resolved the sale is often abandoned rather than going to the president for a formal rejection.

———

 With assistance from Ben Scent, David Ramli and Justin Sink. Kirchfeld reported from London and McLaughlin from Washington.

 

 ©2016 Bloomberg News

 Visit Bloomberg News at www.bloomberg.com

 Distributed by Tribune Content Agency, LLC. </s> HERZOGENRATH (dpa-AFX) - German semiconductor equipment maker Aixtron (AIXG) said that it will explore with its Chinese suitor after President of the United States blocked the acquisition of the U.S. business of Aixtron by Grand Chip Investment GmbH, an indirect subsidiary of Fujian Grand Chip Investment Fund LP .



'The bidder and Aixtron are evaluating the impact of the Order on the conditions to be fulfilled under the takeover offer and will coordinate with the German Federal Financial Supervisory Authority (BaFin) to examine the consequences of the Order on the takeover process,' Aixtron said in a statement.



It added the presidential order was limited to Aixtron's U.S. business and did not prohibit the acquisition of Aixtron shares and American depositary shares by GCI.



Copyright RTT News/dpa-AFX </s> For now, the collapse of the MoneyGram deal could spell trouble for other Chinese companies considering major acquisitions. The effort by Ant Financial, the payments affiliate of the internet giant Alibaba, was seen as a test of the Trump administration’s political and regulatory approach to China.

Other deals under review include the sale of SkyBridge Capital — an investment firm founded by Anthony Scaramucci, an ally of Mr. Trump — to an arm of HNA Group, a Chinese conglomerate.

The collapse of the deal offers the latest sign of a shift — one that began during the end of the Obama administration — over how Washington treats Chinese acquisitions of American assets.

Mr. Trump and other politicians have long criticized Chinese trade practices and their impact on traditional, heavy industries in the United States, such as steel. But officials and lawmakers of both parties have grown increasingly concerned with Chinese purchases in high-tech areas, like semiconductors and artificial intelligence. China — a country that has grown by leaps and bounds in expertise in recent years — has aggressively funded development of next-generation technology in ways that have alarmed some foreign governments and businesses.

That has led to calls to tighten reviews of Chinese purchases of American assets. Chinese investment surged to more than $130 billion in 2017 from just $21.5 billion in 2012, according to Rhodium Group, a research firm. In 2018, bankers say they expect another big year of investment, targeted more at sectors considered important to future economic growth like high technology and renewable energy.

Lawmakers from both parties have introduced legislation calling for greater scrutiny of Chinese investments in the United States. They are pushing for an expansion of the Committee on Foreign Investment in the United States, or Cfius, the multiagency panel that reviews foreign deals for potential threats to national security and that rejected the MoneyGram-Ant Financial plan.

In 2016, American concerns over China’s interest in microchips scotched some Chinese purchases, and last year Mr. Trump blocked the purchase of Lattice Semiconductors by a group with links to China.

The deal’s demise also illustrates rising concerns in both the United States and China over sensitive personal data. In buying a large-scale money-transfer company like MoneyGram, Ant Financial would have had access to a large number of records of financial flows within the United States. That fact, combined with close ties to China’s government, could have created security problems. For example, the flow of funds could point to possible espionage targets in the United States military who face financial difficulties.

Ant Financial has disputed such claims, saying that consumer data would continue to be stored in the United States.

Critics of the deal also asked whether Ant Financial would be able to properly police transactions linked to money laundering or terrorism. Ant Financial had said the deal would give MoneyGram greater resources to toughen its efforts to prevent money laundering.

China, as well, has taken steps to stanch American company access to data. A new cybersecurity law there forces American companies to keep data on Chinese citizens stored within China, while Chinese state-media have run public service announcements warning about private data collected by Apple’s iPhones.

“Data flows out of and into China are an increasing source of suspicion in the bilateral relationship,” said Adam Segal, a senior fellow at the Council on Foreign Relations in New York. He said Washington was in the “paradoxical position” of criticizing the new Chinese law while opposing deals like MoneyGram because of national security concerns.

For Ant Financial, the decision is a setback to its efforts to extend its strong position in online payments abroad. Ant Financial, which grew out of the Chinese payment service Alipay, wanted to buy MoneyGram to accelerate its global expansion. In the past several years, the company has pushed into India, South Korea and Thailand.

Mr. Ma, the Chinese internet tycoon, has worked hard to put a positive face on his companies in the United States. He also controls the Alibaba Group, China’s largest internet company, and last year he hosted a conference in Detroit aimed at helping American businesses sell on Alibaba’s e-commerce sites.

Amid the heightened sensitivity to overseas purchases, MoneyGram and Ant Financial said it was clear that Cfius would not approve the deal, despite their efforts to quell concerns. </s> US officials have effectively killed a Chinese company’s $1.2 billion plan to buy MoneyGram, the money transfer company, signaling the Trump administration’s growing scepticism of Chinese purchases of US companies and of broader business ties between the two economic powers.

MoneyGram and Ant Financial, the Chinese electronic payments company, said they had canceled the deal after failing to win approval from a Washington panel that reviews foreign purchases of US companies.

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” the chief executive of MoneyGram, Alex Holmes, said.

The deal failed despite a charm offensive by Jack Ma, the Chinese internet tycoon who controls Ant Financial. Shortly after Donald Trump won the 2016 election, Ma famously stood with the president-elect in Trump Tower in New York and pledged that his e-commerce empire would help create 1 million American jobs.

That push apparently could not compete with Trump’s concerns about Chinese money and dealmakers, and with his administration’s concerns about Chinese acquisitions of American know-how. The administration is finishing an investigation into Chinese theft of intellectual property owned by U.S. companies, which could result in tariffs on Chinese imports or further restrictions on Chinese investment.

The Trump administration could soon take other steps to stop what it considers unfair Chinese trade practices in China in areas like solar panels. For now, the collapse of the MoneyGram deal could spell trouble for other Chinese companies considering major acquisitions.

The effort by Ant Financial, the payments affiliate of the internet giant Alibaba, was seen as a test of the Trump administration’s political and regulatory approach to China.

Trump and other politicians have long criticised Chinese trade practices and their impact on traditional, heavy industries in the United States, such as steel. But officials and lawmakers of both parties have grown increasingly concerned with Chinese purchases in high-tech areas, like semiconductors and artificial intelligence. China - a country that has grown by leaps and bounds in expertise in recent years - has aggressively funded development of next-generation technology in ways that have alarmed some foreign governments and businesses.

That has led to calls to tighten reviews of Chinese purchases of US assets. Chinese investment surged to more than $130 billion in 2017 from just $21.5 billion in 2012, according to Rhodium Group, a research firm. In 2018, bankers say they expect another big year of investment, targeted more at sectors considered important to future economic growth like high technology and renewable energy.

Lawmakers from both parties have introduced legislation calling for greater scrutiny of Chinese investments in the United States. They are pushing for an expansion of the Committee on Foreign Investment in the United States, or CFIUS, the multiagency panel that reviews foreign deals for potential threats to national security and that rejected the MoneyGram-Ant Financial plan.

In 2016, US concerns over China’s interest in microchips scotched some Chinese purchases, and last year Trump blocked the purchase of Lattice Semiconductors by a group with links to China. The deal’s demise also illustrates rising concerns in both the United States and China over sensitive personal data.

In buying a large-scale money-transfer company like MoneyGram, Ant Financial would have had access to a large number of records of financial flows within the United States. That fact, combined with close ties to China’s government, could have created security problems. For example, the flow of funds could point to possible espionage targets in the United States military who face financial difficulties.

Ant Financial has disputed such claims, saying that consumer data would continue to be stored in the United States. Critics of the deal also asked whether Ant Financial would be able to properly police transactions linked to money laundering or terrorism. Ant Financial had said the deal would give MoneyGram greater resources to toughen its efforts to prevent money laundering.

China, as well, has taken steps to stanch American companies’ access to data. A new cybersecurity law there forces American companies to keep data on Chinese citizens stored within China, while Chinese state-media have run public service announcements warning about private data collected by Apple’s iPhones.

“Data flows out of and into China are an increasing source of suspicion in the bilateral relationship,” said Adam Segal, a senior fellow at the Council on Foreign Relations in New York. He said Washington was in the “paradoxical position” of criticizing the new Chinese law while opposing deals like MoneyGram because of national security concerns.

For Ant Financial, the decision is a setback to its efforts to extend its strong position in online payments abroad. Ant Financial, which grew out of the Chinese payment service Alipay, wanted to buy MoneyGram to accelerate its global expansion. In the past several years, the company has pushed into India, South Korea and Thailand.

Ma, the Chinese internet tycoon, has worked hard to put a positive face on his companies in the United States. He also controls the Alibaba Group, China’s largest internet company, and last year he hosted a conference in Detroit aimed at helping American businesses sell on Alibaba’s e-commerce sites.

Amid the heightened sensitivity to overseas purchases, MoneyGram and Ant Financial said it was clear that CFIUS would not approve the deal, despite their efforts to quell concerns.
United States President Barack Obama blocks China's Fujian Grand Chip Investment Fund's acquisition of the U.S. semiconductor business of German-based Aixtron because of national security concerns. The German Economy Ministry withdrew its approval in October.