Germany’s Biggest Labor Union to Block Chinese Investors Takeover of Osram

German’s largest labor union IG Metall announced it will prevent any attempts made by Chinese investors to acquire lighting giant Osram, indicating the escalating backlash against Chinese involvement in the nation’s high-tech sector, reported Financial Times and other media last week.

IG Metall stated in October in the case of an eventual takeover, it wanted job and plant guarantees, but reevaluated the situation having concluded Osram lacks an investor, reported Reuters.

Osram logo. (Osram/LEDinside)

"We will vehemently oppose any takeover attempt because of ... possible negative effects for the workers," a union spokesman cited Bavarian IG Metall Chief Juergen Wechsler as saying.

The union was concerned that a potential acquirer would run away with Osram’s technology and relocate production to a foreign country outside of Germany.

Unfolding union developments are a result of German government's increasing reluctance to sell companies with core technologies to Chinese investors, following market rumors that top Chinese LED chip maker San’an Opto was in talks with Osram’s largest shareholder Siemens to acquire a majority stake in the company.

Siemens is Osram’s largest shareholder with about an 18% stake in the company.

Sigmar Gabriel, Germany’s deputy chancellor and economics minister, headed the protectionist policies. He opposed Chinese consumer electronic manufacturer Midea’s acquisition of German robot maker Kuka, and sent a Chinese takeover of Aixtron back into review phase in late October.

A few days after the German government halted Aixtron’s deal, the sale of Osram’s general lighting business LEDVANCE to Chinese investment consortium led by IDG Capital was put on hold, as the government requested submission of additional documents.

The LEDVANCE deal that is still under review by relevant German government agencies faces increasingly possibilities of being called off.

The German labor union’s action might halt ongoing talks between Osram and Chinese investors altogether, said LEDinside Research Director Roger Chu.

“The possibility of Osram being forced to cancel the sale of its general lighting business LEDVANCE to Chinese investment consortium led by IDG Investment and including members such as MLS has increased,” said Chu.

Back in July, Osram agreed to sell its general lighting bulb unit LEDVANCE to IDG Capital led consortium for more than EUR 400 million (US $434 million).

Chinese investors can still get around \growing protectionism measures implemented by European and U.S. governments, by forming joint ventures with the company they want to merge with, said Chu.

San’an Opto, for instance, was able to bypass The Committee on Foreign Investment in the United States (CFIUS) blocked the acquisition of GCS Holdings by forming a joint venture. The Chinese semiconductor manufacturer San’an Opto manufactured the finished goods for the established company, while GCS Holdings supplied the technology know-how.

“This might be a potential solution for Osram, but it is not applicable to all companies,” noted Chu. “It will depend on whether the company being acquired finds this arrangement beneficial.”

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