Yahoo Finance Coronavirus: UK looks to increase scrutiny of foreign takeovers amid pandemic
The UK government wants to up the scrutiny of foreign takeovers of businesses that are directly involved in the COVID-19 response via changes to the Enterprise Act 2002, which will be presented to parliament on Monday (22 June).
This comes amid concerns regarding China buying high-tech companies in the country.
The proposal is to ensure these takeovers “do not threaten the UK’s ability to combat a public health emergency such as coronavirus” the Department for Business, Energy & Industrial Strategy said in a statement.
The statement noted that some businesses are more susceptible to takeovers, either from outwardly hostile approaches, or financially distressed companies being sold to malicious parties.
The government wants to protect companies that, for instance, are working on vaccine research or manufacturing personal protective equipment.
The plan also applies to three sectors of the economy that the government believes are central to national security: artificial intelligence, cryptographic authentication technology and advanced materials
Secretary of State for Business, Alok Sharma said: “To better protect the country’s resilience to COVID-19 we are taking steps now to mitigate against public health emergencies.
“These powers will send an important signal to those seeking to take advantage of those struggling as a result of the pandemic that the UK government is prepared to act where necessary to protect our national security.”
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Currently, the business secretary can intervene only if the targeted business has a UK turnover of more than £1m ($1.23m). This figure was cut down from £70m in 2018.
The concern about China comes in part from the purchase of Imagination Technologies, a Hertfordshire-based semi-conductor company by Canyon Bridge Partners, in 2017.
BBC reported that 99% of the funds for the deal came from China Reform, which is backed by the Chinese government.
"This is just part of an incremental process where technology is being moved out of the UK, and out of the West, and towards China," the report quoted Tom Tugendhat MP, who chairs the Foreign Affairs Select Committee, as saying.
