Germany approved changes (link in German) to its foreign investment law on Wednesday 8 April after ministers had warned that German companies could be the target of hostile foreign takeovers during the coronavirus pandemic.

The government will now be able to intervene earlier at a lower equity threshold to prevent or put on hold acquisitions from non-EU countries that could lead to "likely interference" in public order or security — before the law stated that a takeover had to pose an "actual risk."

The changes will allow the government more scope to protect key industries such as tech and robotics from strategic investments, such as from state-owned Chinese companies.

“As the current situation shows, we in Germany and Europe need to have our own competencies and technologies in certain areas,” said economy minister Peter Altmaier.

Markus Söder, the premier of the state of Bavaria, which is home to big brands like Siemens, Allianz, BMW and Audi last month called for foreign takeovers to be banned to protect domestic companies.

"If at the end of this crisis... almost the entire Bavarian and German economy is in foreign hands and we no longer have any control options, then it is not just a medical crisis," he said.

Read more: Coronavirus: German government fears hostile takeovers of weakened companies

Germany’s leading economic institutions today predicted that the country was facing its biggest quarterly slump since they began keeping accounts in 1970. The Ifo Institute for Economic research estimates that economic output will shrink by nearly 10% in the second quarter, and by 4.2% this year, as a result of the shutdown.

Berlin last month launched an ambitious €750bn (£661bn,$814bn) aid package, a majority of which goes towards helping companies survive during the coronavirus pandemic via loans and grants. It also lowered the bar for them to be granted “Kurzarbeit” or short-time work support for employees; the government pays between 60% and 67% of a worker’s salary for an agreed amount of time to avoid layoffs.



