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UPDATE 2-Chinese bidders walk away from Osram takeover - sources

Published 14/12/2016, 05:04 am
© Reuters.  UPDATE 2-Chinese bidders walk away from Osram takeover - sources
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* Source cites resistance from unions and politicians

* Chinese warming to idea of taking minority stake - source

* Development comes after Chinese deal for Aixtron blocked (Adds ministry comment in paragraph 4)

FRANKFURT, Dec 13 (Reuters) - Chinese interest in a takeover of lighting group Osram Licht AG OSRn.DE has cooled amid signs of mounting political opposition to Chinese acquisitions in Germany, two people familiar with the matter said on Tuesday.

Sanan Optoelectronics 600703.SS and venture capital firm GSR Go Scale Capital Advisors have stopped pursuing a bid for the whole company, said the people, who declined to be named.

"Resistance from labour representatives and from politicians has left an impression on the Chinese," one of them said.

A spokesman for the German economics ministry declined to comment on what it described as business decisions by investors, saying the strategic direction of the company was up to Osram.

Osram declined to comment. Sanan and GSR Go Scale Capital Advisors could not immediately be reached for comment.

A Chinese takeover of Osram, which has a market capitalisation of about 5 billion euros ($5.3 billion), had already run into opposition from the IG Metall trade union.

The sources said a takeover was also likely to face political obstacles following the blocking of the acquisition of German silicon chip manufacturing equipment maker Aixtron AIXGn.DE by Chinese buyers. Fujian Grand Chip Investment Fund withdrew its bid for Aixtron after the United States blocked the acquisition of its U.S. division on national security grounds and German authorities withdrew their approval. collapse of the Aixtron deal comes amid growing objections in Germany and the United States to China buying up firms with strategic technologies abroad without allowing reciprocal transactions at home.

Osram is shifting its focus from light bulbs to lighting technology, investing in chips for LED lights and making it a potential target for chipmakers such as Sanan.

Another source familiar with the matter said the Chinese buyers may settle for a stake of less than 25 percent in Osram.

"Chinese investors are warming to the idea of taking a minority stake in Osram as that would not draw scrutiny under German law," the person said, adding that the Chinese bidders may settle for a 17.5 percent stake owned by Siemens SIEGn.DE .

But Osram also makes components such as LED chips and alloys that are considered dual-use goods, meaning they can be used for civilian and military purposes.

An investment in Osram by Chinese investors could potentially be examined by the Committee on Foreign Investment in the United States (CFIUS), so a deal might need to be structured to exclude any sensitive technology.

Earlier this year Go Scale Capital was blocked from buying Lumileds, an LED components and car lighting business in the United States owned by Philips PHG.AS , following CFIUS opposition.

On Monday Philips agreed instead to sell Lumileds to U.S. private equity investor Apollo Global Management APO.N . ($1 = 0.9398 euros)

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