After a customer cancelled a large order at the last minute, shares in Aixtron, a German high-tech company, sank fast. Months later, with the stock still reeling, a Chinese investor agreed to buy the company.
If only it were as simple as smart deal-making.
Financial filings and public statements indicate a web of relationships among the customer, the buyer and the Chinese state. The links highlight the blurred lines between increasingly acquisitive Chinese companies and Beijing's long-term industrial policy.
"The Aixtron case makes it very clear: It is not regular investment that is at work here," said Sebastian Heilmann, president of the Mercator Institute for China Studies, a think tank based in Berlin. "Instead, we see governmental-programme capital working behind the scenes."
Chinese leaders have made clear their intention of using state funds to acquire technological capabilities overseas and bring them home, and a series of purchases in recent years have highlighted that strategy.
That has led to questions about how to treat bids that cross between private investment and state-orchestrated takeovers. It has also fed into broader suspicions about the fate of the takeover targets, and whether national champions will ultimately be absorbed into the supply chain in China.
Aixtron - one of a growing number of European businesses with cutting-edge technologies that have recently been targeted by a surge in Chinese overseas investment - provides a case study.
A university spinoff, it employs hundreds of highly skilled engineers and has a decades-long history of making the advanced tools needed to make semiconductors. Its systems can deposit layers of chemicals just atoms thick that grow the crystals needed to make chips and light-emitting diodes.
It was facing a broad slowdown in demand in 2015 when San'an Optoelectronics, based in the eastern Chinese city of Xiamen, cancelled a large order at the last minute.
The decision sent Aixtron's share price crashing. By May of this year, it had agreed to sell itself to a Chinese investment fund, Fujian Grand Chip.
Yet in a twist that shows the conflicting interests that can lurk behind Chinese deals, San'an has a number of connections to Fujian Grand Chip, including a common investor and an existing financial relationship.
Fujian Grand Chip is 51 per cent controlled by Liu Zhendong, a businessman the Mercator Institute said most likely had government connections but was otherwise hard to track. The rest is held by Xiamen Bohao, a local government investment fund that itself has links to San'an.
A financial filing showed that at the end of 2014, San'an owed Bohao 300 million renminbi, now worth about $45 million. The following year, another filing showed Bohao owed San'an 240 million renminbi. While there is no explanation given for the fund flows, they appear to be related to financing provided to San'an by Bohao.
There are other links as well. Another state-run investment firm based in Xiamen holds stakes in both companies. And a broader national investment fund is providing a loan facility, through a subsidiary, for the takeover of Aixtron while holding a stake in San'an.
Just three days after the Aixtron bid was announced, a new company was registered at an address in Quanzhou along the Taiwan Strait. San'an was an investor in the company, and the address was the same as that listed by Fujian Grand Chip in its Aixtron offer.
The connections do not necessarily indicate wrongdoing. Still, they raise questions about the independence of Chinese companies that have been on a global high-tech spending binge.
© 2016 The New York Times News Service
