Jean-Claude Juncker sets out "investment screening" plans to scrutinise EU foreign takeovers

William Turvill
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Jean-Claude Juncker said in his State of the Union speech: "Europe must always defend its strategic interests" (Source: Getty)

European Commission president Jean-Claude Juncker today confirmed his plans for a new framework to “screen” foreign takeovers of EU companies.

The commission is expected to set out more details on the foreign deal crackdown in Brussels tomorrow. Chinese takeover activity in particular has caused a stir in Europe, with China-to-EU M&A reaching record levels last year.

“Europe must always defend its strategic interests,” Juncker said in his State of the Union speech this morning.

“This is why today we are proposing a new EU framework for investment screening.

“If a foreign, state-owned, company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen in transparency, with scrutiny and debate.

“It is a political responsibility to know what is going on in our own backyard so that we can protect our collective security if needed.”

Figures from Thomson Reuters released today show foreign takeovers within the European Union have declined for the third year in a row in 2017.

Inbound M&A has totalled $164bn so far this year, down four per cent compared with this time last year. The UK, whose government is also considering plans for a crackdown on foreign takeovers, has been the most attractive EU destination for foreign investment, accounting for $65bn, or 40 per cent of the total.

Read more: Juncker outlines plans for "more united Union"

Following a record year for Chinese M&A in the EU last year, with deals totalling $36.6bn, investment is down 11 per cent so far this year compared with the same period in 2016.

Commenting on the plans outlined by Juncker, Harald Selzner, co-chair of the global M&A practice at Latham and Watkins, said: “The latest proposals are in line with the steps already taken by a number of EU governments to more closely scrutinise the sale of critical assets to foreign acquirers.

“While the direction of travel here remains broadly consistent on a global level, it is important that rule makers in Europe and elsewhere remain sensitive to the notion that foreign investment in general is an opportunity rather than a threat, and that the process remains predictable, clear, reliable, and fast, and takes into account the legitimate interests of business owners and investors.”

Read more: China official warns over foreign takeovers as outbound M&A falls

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