BERLIN (AFP) - Chancellor Angela Merkel's government has blocked a Chinese defence company from buying up a German company specialising in satellite and radio technologies including 5G over national security risks, local media reported on Thursday (Dec 3).
Based in North Rhine-Westphalia state, the company called IMST is an acquisition target of Addsino, a subsidiary of state-owned defence group China Aerospace Science and Industry Corporation which manufactures military communication systems, German news agency DPA reported, citing a government document.
The Economy Ministry confirmed that Merkel's Cabinet agreed on Wednesday to block an acquisition by an foreign player, but would not name the companies involved.
"The criterion for examination is always the threat posed by a concrete acquisition to the public order or security of Germany," the ministry told AFP in a statement.
With alarm growing on an increasing number of Chinese companies snapping up German know-how, Merkel's government is pushing to toughen up oversight of non-EU takeovers.
The government currently can review purchases of stakes at 25 per cent or above, but a draft law is pending before pending on pushing the threshold to as low as 10 per cent.
Quoting a government document on the latest blocked takeover, DPA reported that Merkel's Cabinet found that the potential acquisition constituted "actual and serious risks".
IMST has developed a key component for the TerraSAR-X Earth observation satellite, whose data is used by Germany's defence ministry to construct 3-D models used in simulation or weapons systems.
"Without a ban, this knowledge would flow to China and contribute to China's armament," according to the document quoted by DPA.
The German company is also involved in 5G technology development and would not be deemed a reliable partner by Berlin if it fell under the control of a Chinese defence company.