European governments’ scrutiny of foreign and predatory takeovers of companies deemed essential for security and public order has intensified amid the coronavirus crisis.
On 25 March, the European Commission, the EU’s executive arm, issued guidelines to protect companies against takeovers by non-EU entities including states and governments, as well as private companies. The EC is offering guidance to be applied within the context of the EU framework for screening foreign direct investments, which will apply across all member states from October 2020.
Private equity firms whose headquarters are not in Europe can expect an additional three months on the transaction process and more conditions for acquisition, such as keeping manufacturing plants in Europe or retaining workers.
While the guidance does not introduce new laws, the message is clear: member states should use whatever powers they have to protect strategic assets and technologies from foreign takeovers at this time.
“As in any crisis, when our industrial and corporate assets can be under stress, we need to protect our security and economic sovereignty,” Commission head Ursula von der Leyen said announcing the guidelines.
What could this mean for private equity firms eyeing European targets? Here’s an interactive map from sister title Private Equity International for a summary of measures governments are taking.