Obama blocks proposed takeover of Germany's Aixtron

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WASHINGTON (AP) — Citing a national security risk, President Barack Obama on Friday blocked a Chinese investor's proposed takeover of Aixtron SE, a German maker of semiconductor manufacturing equipment, a rare move that drew objections from Beijing and complaints that the U.S. was injecting politics into the deal.

Obama ordered Fujan Grand Chip to "fully and permanently abandon" its proposed acquisition of Aixtron SE's California-based subsidiary, Aixtron, Inc. The decision upheld a recommendation from the Committee on Foreign Investment in the U.S., which reviews foreign purchases of U.S. companies.

The decision threatens to jeopardize the larger deal, which is under scrutiny Berlin and is valued at $740 million.

In a statement issued Friday evening, the Treasury Department cited the president's power to suspend or block acquisition where there is "credible evidence that the foreign interest exercising control might take action that threatens to impair national security." Aixtron's technology has "military applications," the statement said.

It is only the third time Washington has blocked a Chinese corporate takeover on security grounds.

China had appealed to Washington and Berlin to avoid injecting politics into the proposed takeover.

"Since it's a normal commercial activity, it will be carried out following the rule of markets and business. We hope the external parties will not over-interpret that or make any political intervention," said foreign ministry spokesman Geng Shuang, shortly before Washington announced the order.

Chinese companies have made a multibillion-dollar string of acquisitions in Europe to obtain technology and brands including Club Med, Pirelli tires and Volvo Cars.

Many Europeans welcome the influx of money at a time when economic growth is struggling. But China faces criticism from European business leaders that they are blocked from making similar acquisitions in its state-dominated economy.

Aixtron, based in Herzogenrath, says its headquarters, research and development operations and existing technology will remain at its current sites.

The German government announced Monday it was reconsidering whether to allow the takeover. A spokeswoman cited "security-related questions" but gave no explanation.

In 2012, Obama blocked Chinese-owned Ralls Corp. from building a wind farm near a naval base in Oregon. In 1990, then-President George Bush blocked the purchase of MAMCO Manufacturing Inc., a maker of aircraft parts, by a Chinese state-owned company.

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