It happened again… 2nd prohibition decision in German foreign investment control

2020 is and remains the hottest year in foreign investment control to date. We have seen a range of reforms over the past months and 60% of OECD member states have revised their regimes or announced plans to do so in the immediate future. This includes three reforms in Germany, including a lowering of the substantive thresholds for interventions by the German Ministry of Economics and Energy in foreign investment cases.

Yesterday, after more than one year of proceedings, the Federal Government authorised the second ever prohibition decision in a German foreign investment case, relating to the acquisition of German mid-sized IMST by Chinese Addsino. IMST is active in radio systems, chip design, antennas and EDA software and holds a notable RnD position in these areas including a strong research network and was the beneficiary of public funding.

This prohibition sends another strong signal to the market to not take foreign investment control lightly and it is an imperative for companies engaged in M&A to consider foreign investment control early in the process, including a thorough check of global filing requirements and substantive risks and the availability of mitigation measures.