Europe fears Chinese corporate takeovers tied to Covid-19

Asset prices have crumbled around the world, and European institutions have started warning their members that they need to bolster corporate defenses to prevent a Beijing-led buying spree. And EUcompetition chief Margrethe Vestager told The Financial Times (paywall) that European governments should buy stakes in key companies to prevent Chinese takeovers. Chinese buyers took controlling stakes in strategic infrastructure and mining companies in European countries that were particularly hard-hit by the 2008 financial crash, including Portugal, Spain, and Greece. ____________________________________________________  More on coronavirus: ____________________________________________________ “There were a lot of assets being bought on the cheap because of discussions with the euro zone, and the trend there at the time, in Germany in particular, that some of those countries needed to get their fiscal health back into order,” said Agatha Kratz, associate director at the US-based research firm Rhodium Group. Not really, according to Peter Lu, a partner at the law firm Baker & Mackenzie who specializes in mergers and acquisitions and leads the firm’s China Practice in the UK. “I don’t think it’s a real concern.” Lu doesn’t foresee a Chinese shopping spree in Europe for three reasons, some of which are echoed in a recent report written by Rhodium Group partners Thilo Hanemann and Daniel Rosen. And I would imagine in China this is exactly the same, where the situation is so bleak internally that a lot of those companies are just facing human resources, logistical,supplier, client disruptions, that at least the resources dedicated to outward investment are going to be extremely limited.” Gallery: Coronavirus turns the world into a ghost town (The Atlantic) Still, write Rosen and Hanemann, “some Chinese firms are positioned to take advantage of the sharp drop in global company valuations.” Lu said investments will be more strategic than in the past, and reflect Chinese companies’ desire to be competitive in their home market.