Foreign direct investment screening: Germany is getting tougher with non-European investors

​The German government is prepared to use its powers to block foreign direct investments. The proposed acquisition of the German mechanical engineering company Leifeld is the landmark case in which, for the first time ever, Germany has prohibited a foreign investor from acquiring a German business. Even after it was announced that the Chinese acquirer dropped the proposed acquisition, the German government reportedly issued a precautionary blocking decision. The Leifeld case underlines the change in attitude based on which the German rules on foreign direct investment control are administered.

Going forward, foreign investors will have to analyse even more thoroughly than before whether the respective target business presents any reason based on which the German government could intervene. Investors may also take into consideration how to profile themselves and their proposed acquisition with a view to public perception and tone from the top in the ministry. These preparations require ground work at an early stage and need to be driven forward together with a team of professional advisors. They cannot be taken seriously enough.

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For further information on European investments please see our client bulletins below:

• Foreign investment control in Germany: Berlin Wall rebuilt or storm in a water glass?
• European Commission proposes common approach to foreign direct investment screening
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