Business Secretary Kwasi Kwarteng triggered a further review of a proposed China-linked takeover of a UK-based graphene firm, stepping in on national security grounds.
He has written to the Competition and Markets Authority (CMA), instructing them to carry out an in-depth Phase 2 investigation of the planned acquisition of Perpetuus Group, with buyers including Shanghai Kington Technologies and a Chinese academic.
Kwarteng said: “The UK remains firmly open for business, however we have been clear that foreign investment must not threaten our national security. I have considered the evidence presented to me and asked the CMA to undertake an in-depth investigation so we can fully consider the implications of this transaction.”
Graphene is a highly durable material – stronger than diamond – while also being extremely flexible and among the world’s thinnest materials.
It is used in all sorts of products and devices including anti-corrosion paints, sensors, electronics, solar panels, and in drug delivery devices.
The takeover has concerned Downing Street as the Swansea-based firm supplies at least a quarter of all graphene plasma goods in the UK.
His decision follows the completion of the Phase 1 process, during which the CMA conducted an initial investigation of the potential implications for marketplace competition following the deal.
The CMA has decided there is no risk of a substantial lessening of competition, publishing its Phase 1 report yesterday, however the Business Secretary has ‘quasi-judicial’ powers under the Enterprise Act 2002 to intervene in certain mergers on public interest grounds.
It will now lead the Phase 2 investigation covering the national security implications, and will have 24 weeks (subject to a possible 8-week extension) to conduct the investigation and deliver a final report to the Business Secretary.
Kwarteng has previously raised concerns over Chinese investment into the key parts of the UK energy and industrials markets.
Last year, unveiled the Nuclear Financing Bill, which encourages domestic funding for nuclear power plants through the regulatory asset base model.
The government is also reportedly planning to pish Chinese state-backed firm CGN out of its 20 per cent stake in the proposed Sizewell C nuclear power plant.