Prime Minister Draghi Denies Third Chinese Acquisition of Italian Company

Mario Draghi, Prime Minister of Italy
[Photo by Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Italian Prime Minister Mario Draghi has once again exercised his veto against a Chinese company's attempt to acquire a domestic company. This is the third time Prime Minister Draghi has made such a decision.

According to foreign media on the 23rd (local time), Prime Minister Draghi decided on the 18th during a cabinet meeting to disallow the acquisition of Applied Materials' Italian business by China's Zhejiang Jinsheng Machinery, following the recommendation of the Minister of Industry who argued that the strategic semiconductor industry could be affected.

Zhejiang Jinsheng Machinery planned to establish a joint venture with Applied Materials' Hong Kong subsidiary to acquire Applied Materials' screen printing equipment business in Italy. Through this joint venture, Zhejiang Jinsheng Machinery also intended to acquire Applied Materials' wafer equipment business in Singapore and assets within China.

Prime Minister Draghi, who took office in February, previously blocked Shenzhen Inventland Holdings' acquisition of shares in a domestic semiconductor equipment manufacturer in April, and last month also disallowed the acquisition of a vegetable seedling producer by Chinese company Syngenta.

Foreign media explained that this decision was made under the so-called "Golden Power Law," which allows government intervention to prevent control of strategically important companies from passing to foreign firms. Since the Golden Power Law was enacted in 2002, the government has exercised veto rights in five cases, four of which involved acquisition attempts by Chinese companies.

According to Bloomberg News, acquisitions of European companies by Chinese firms have sharply declined over the past two years. The European Union (EU) Commission reported that last year, mergers and acquisitions (M&A) by Chinese companies in Europe fell by 63% compared to the previous year, and their share of total M&A dropped to 2.5% from 4% the year before.

This content was produced with the assistance of AI translation services.