ALEXANDER CAMPBELL / LONDON
Law would enable German government to block sale of companies to foreign bidders
A proposed law to enable the German government to block foreign takeovers of the country's arms manufacturers could halt the potential sale of DaimlerChrysler's aero engine unit MTU to the USA's Carlyle Group.
The German economics ministry says that at present - unlike in France or the UK - the German government has no power to block foreign acquisitions.
"We can't hinder such a takeover - there are only limits on exporting products, not firms. At the moment such a takeover can happen without the government even being informed. We want to give them the chance to refuse it."
The ministry will submit a draft law to the German cabinet later this month, which will cover "weapon technology and all technical areas where the government has a special interest in sensitive products", and will probably impose a 25% cap on foreign ownership, says the ministry.
This news leaves the future of the MTU sale uncertain. Of the five bidders for MTU, three (the Blackstone Group, Kohlberg Kravis & Roberts, and JF Lehman) are US-based, and a fourth, Doughty Hanson, is based in the UK.
The fifth bidder, also believed to be a private equity firm, is unknown.
If MTU turns out to be covered by the proposed law, the pressure will be on DaimlerChrysler and the bidders to complete the sale before the legislation is passed by the parliament, which "will probably take some months", says the ministry.
Source: Flight International