Ashurst advises on first German public takeover by Chinese state-owned company

Ashurst was among a raft of firms that have secured advisory roles in Chinese state-owned group Aviation Industry Corporation of China (AVIC)’s €320m acquisition of German listed company KHD Humboldt Wedag International AG (KHD).

The Chinese group, which already indirectly owns a stake in German industrial-plant builder KHD, has submitted a voluntary public takeover offer together with three further bidders from Singapore. The transaction is the first public takeover of a German listed company by a Chinese state-owned enterprise.

The Ashurst team acting for the Chinese group and the Singaporean bidders is led by Frankfurt-based partner Reinhard Eyring and counsel Martina Rothe. Senior associate Fabian von Samson-Himmelstjerna and associate Joanna Wilczynska-Gluch, both from the corporate team in Frankfurt, are also part of the core team. The firm’s finance partners Tom Beckerhoff in Frankfurt and Dominic Gregory in Hong Kong have provided support with respect to the financing aspect of the transaction.

Chinese firm Zhong Lun and Jun He have advised the Chinese group on PRC law. Jones Day has been advising AVIC on antitrust and competition law, led by Frankfurt competition partner Carsten Gromotke.

The financing bank to the bidders, ICBC Asia, instructed Mayer Brown, fielding Hong Kong partner Francis Chen and Frankfurt partners Ulrike Binder and Dirk-Peter Flor. 

“This is particularly remarkable due to the fact that public takeovers in Gemany have up to now posed problems which have been almost impossible for state-owned companies from China to solve, and we have broken new ground with this transaction,” said Eyring.

According to Eyring, Chinese state-owned enterprises have to meet numerous regulatory requirements which have also in this case greatly complicated the transaction. For example, pursuant to the Securities Acquisition and Takeover Act (WpÜG) a Chinese bidder, being part of a group whose parent company’s shares are owned by the Chinese state, has to disclose all Chinese state-owned enterprises in the offer document. The relevant annex can therefore comprise several thousand pages – in this case approximately 5,800 pages.

AVIC is a longstanding client of Ashurst. In 2011, the firm advised the Chinese group on the acquisition of a 20 per cent stake in KHD by its subsidiary Max Glory Industries. In 2012, Ashurst’s Hong Kong office acted for AVIC on its investment in the Finnish ship design and engineering company, Deltamarin.

AVIC is an aerospace and defense company owned by the Chinese state, ranked 212 in the Fortune Global 500. In the financial year 2012, AVIC generated a consolidated turnover of approximately RMB300.6 billion (€36.6bn).