Temporary relaxation of EU state aid rules could counter foreign takeovers

(The Asset, 22 April 2020) European Union rules on state aid to private sector companies, including short term export credits, have been suspended until December as national governments step up financial packages to rescue their corporations. A recent report notes that the Covid-19 crisis has come at a time when the EU was already putting in place rules that bring foreign takeovers under tighter control. These takeover rules provide a framework for EU member states to screen foreign direct investments into the EU, on the grounds of security or public order. With many companies across the EU going into administration, foreign buyers are looking to acquire assets at bargain prices. Politicians in both the UK and Germany have already identified Chinese investors as being at the forefront.  A deal agreed by Turkey and China last month was largely overshadowed by news that the coronavirus could lead to Chinese firms taking much bigger stakes in Turkish companies struggling to cope with the fallout from the pandemic.