Germany will block foreign takeovers to avoid economy sell-out
Germany will protect domestic firms from foreign takeovers, two leading politicians said on Friday, after company valuations in Europe’s largest economy have been hammered by the coronavirus pandemic.
Ministers have already promised liquidity support to businesses and introduced measures making it easier to reduce working hours rather than lay off workers.
The cabinet is due to decide on further support measures on Monday, when a government source said it would back a supplementary budget worth around 150 billion euros ($161.18 billion).
Germany’s blue-chip DAX index .GDAXI, which comprises the country’s 30 largest listed corporations, has plunged more than a third over the past month as the coronavirus outbreak has brought several economies to a near standstill.
This has increased the risk of foreign companies snapping up rivals at a discount.
“We will avoid a sell-out of German economic and industrial concerns. There cannot be any taboos. Temporary and limited state support as well as participations and takeovers need to be possible,” Economy Minister Peter Altmaier said.
Automotive companies have been among the worst hit, with Daimler (DAIGn.DE), Continental (CONG.DE) and Volkswagen (VOWG_p.DE) shares down 44-48% over the past four weeks.
Markus Soeder, state premier of Bavaria, where heavyweights such as Siemens (SIEGn.DE) and BMW (BMWG.DE) are based, said all legal options should be explored to block potential bids for German companies.
“If most of Bavaria’s and Germany’s economy ends up in foreign hands once this crisis is over … then it’s not only a health crisis but a profound alteration of the global economic order,” he said.
“We need to brace ourselves for that.”
German magazine Der Spiegel reported on Friday that Berlin was considering a half-trillion-euro fund to support companies thrown into payments difficulties by the coronavirus crisis, which would be able to guarantee liabilities or even inject capital when needed.
The plan is one of several being considered by officials as the government puts together a rescue package intended to keep the short-term havoc wrought by shutting down the economy from becoming a rout.
One option is a 40-50 billion-euro ($43-$54 billion) “solidarity” fund for the self-employed and businesses with fewer than 10 employees, which could help them buy materials, pay rents and meet leasing payments. The details for this program are due to be thrashed out over the weekend.
The roughly 500 billion-euro fund first reported by Der Spiegel is modeled on the 480 billion-euro Special Fund for Market Stabilisation that the government set up to support banks at the time of the financial crisis.
The government is prepared to revive that fund if banks get into difficulties, Der Spiegel said.
The finance ministry is currently considering direct support programs to a value of around 180 billion euros, the magazine said, adding that sum might be increased to 700 billion euros.
Airline Lufthansa (LHAG.DE), which has been particularly badly hit, said on Thursday it would seek state help if the crisis persisted, adding this was not yet the case.
German investor Heinz Hermann Thiele has increased his stake in Lufthansa to 10%, a regulatory filing showed on Friday.