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ARTICLE · 15 AUGUST 2018

Germany Blocks Two Transactions Involving Chinese Investors On National Security Grounds

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Both transactions were prevented based on concerns of risk to public order and national security.

GlobalGovernment, Public Sector
Jones Day
Jones Day
Matt Evans
Matt Evans
Chase Kaniecki
Chase Kaniecki
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In Short

The Situation: Germany prevented State Grid Corporation of China ("SGCC") from acquiring a 20 percent minority stake in 50Hertz, one of Germany's four providers of high-voltage transmission systems, as well as the acquisition of a German specialist in high-strength metal forming by a French/Chinese consortium.

The Reason: Both transactions were prevented based on concerns of risk to public order and national security.

Looking Ahead: Other countries around the world are taking steps to adopt new, or amend existing, foreign direct investment review regimes to protect national security.

In what appears to be a coincidence with respect to the timing, Germany's government ("Government") effectively blocked two transactions involving Chinese investors on grounds of national security within days of one another. Such actions come at a time when Chinese investments in other jurisdictions also are being increasingly scrutinized, for instance by the Committee

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