Chinese investment Government Seeks White Knight for Kuka

The German government is looking for a European buyer to step in and purchase industrial robotics maker Kuka, either Siemens, ABB or a carmaker, to prevent its $5.2-billion sale to Chinese firm Midea.
German Economics Minister Sigmar Gabriel favors local industry, such as Siemens.

The German government is actively looking for a European white knight to step in and block the €4.6-billion, or $5.2-billion, sale of industrial robot maker Kuka to a Chinese appliance maker.

According to Reuters, Vice Chancellor Sigmar Gabriel said that the government was trying to find an alternative buyer following Midea's takeover bid. "There are efforts to formulate an alternative offer. Whether that materializes, we will see," he told reporters on Wednesday.

Earlier, Handelsblatt had learned that the matter was deemed so important that Chancellor Angela Merkel’s office, the Foreign Affairs Ministry and the Economics Ministry are all looking for an alternative bidder for the Augsburg-based maker of industrial robots.

The German government sees Munich industrial group Siemens or Zürich rival ABB as potential candidates to buy Kuka, to scupper the bid from Chinese washing machine and air conditioner maker Midea.

Of course I would view it as appropriate if there were at least an alternative offer from Germany or Europe. Sigmar Gabriel, Germany's Economics Minister

Midea owns 13.5 percent of Kuka. Two weeks ago, the Chinese company said it was seeking to acquire at least a 30 percent stake in the Bavarian robot maker, which would value Kuka at €4.6 billion.

ABB and Siemens officially declined to comment, but people familiar with Siemens' position said the German engineering giant was not interested in buying Kuka because a rival offer would cost too much.

German Economics Minister Sigmar Gabriel, who is the country's vice chancellor and a likely challenger to Angela Merkel in next year's election, said on Tuesday: “Of course I would view it as appropriate if there were at least an alternative offer from Germany or Europe.”

In an interview published Tuesday, Guenther Oettinger, a German E.U. Commissioner, raised the possibility of a European "white knight'' to block the sale of Kuka to Midea.

For the government, another option to keep Kuka in European hands would be a consortium of a carmaker and an Arab investment fund, according to people familiar with the matter. Arab states, however, tend not to be interested because they don't have their own automakers, and thus wouldn't benefit.

 

089 Kuka-01 WTB 2015

 

German politicians are worried a Chinese takeover of Kuka could lead to an outflow of technology and the loss of a leader in German industrial automation.

Kuka’s customers in the car industry have a similar view. Kuka’s robots operate in a networked production flow and possess detailed knowledge of when parts are used on an assembly line, one car supplier, which declined to be named, told Handelsblatt.

“We fear that this production know-how might end up in the wrong hands,” the person of the car supplier said.

There were other voices from business who were less worried. Daimler chief executive Dieter Zetsche told the business weekly WirtschaftsWoche that fears were unfounded. Attending an event hosted by the Association of European Automobile Manufacturers, Mr. Zetsche, head of the firm which makes Mercedes cars and trucks, said German and European suppliers had had “no negative experiences with Chinese shareholders." There’s at least no evidence of a risk, if Midea buys into Kuka, he said.

Mr. Zetsche is currently president of the association but he emphasized that he was speaking as head of Daimler, rather than in the name of European car suppliers.

Germany’s top industrial association, the BDI, is skeptical of political meddling with Kuka. “Mergers and acquisitions are part of the global economy, of which the export nation Germany is one of the main beneficiaries,” industry association representative Friedolin Strack said.

Fears of know-how outflows are often unfounded, while a Chinese owner opened up new channels to export to the Asian country, Mr. Strack said.

Kuka’s chief marketing officer Wilfried Eberhardt shared this view, saying Tuesday the Chinese market was an important potential growth market.

 

Thomas Sigmund is the bureau chief in Berlin, where he directs political coverage. Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. Martin Wocher is an editor with Handelsblatt, focusing on the mechanical engineering and steel industries. To contact the authors: [email protected][email protected] and [email protected]