Germany reportedly readies legal veto on sovereign fund takeovers

The German Economy Ministry has finalized a draft law aimed at protecting companies from foreign takeovers, a government spokeswoman said on Monday.

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Under terms of the bill, the government would be able to scrutinize acquisitions by foreign sovereign wealth funds of more than 25 percent in a German company, the business daily Handelsblatt reported earlier on Monday, citing a copy of the bill.

If such a purchase was deemed to pose a threat German public security or order, Berlin could prevent it from going through, the newspaper added.

The ministry spokeswoman said the draft was completed and would be reviewed by other government ministries. She declined to offer details on its content or say when it might be
approved by the cabinet of Chancellor Angela Merkel.

Until now, the government held this kind of veto only over deals that involved the arms industry, Handelsblatt said, adding the draft law now requires approval by the cabinet.

The rise in strength of state-owned sovereign wealth funds, especially those in China, Russia and the United Arab Emirates, has raised concern in Germany, where some fear they serve interests that go beyond purely financial ones.