King & Wood Mallesons (KWM) has accompanied Chinese Bohai Automotive Systems CO, LTD. (Bohai) in successfully completing its transaction, namely the participation in German TRIMET Automotive Holding GmbH (TRIMET Automotive) and the establishment of a Joint Venture with TRIMET Aluminum SE. Major shareholders of Bohai are Beijing Hainachuan Automotive Parts (BHAP) as well as Beijing Automotive Group Co. (BAIC). Against the background of German authorities recently taking a critical approach on acquisitions by Chinese investors, this successful completion of the transaction following intensive review proceedings according to the German Foreign Investment Act (AWG) is particularly satisfying.
The acquisition of 75% of the shares in TRIMET Automotive by Bohai was completed on 2 August 2018 after the German Ministry for Economy and Energy has finalised its review based on the new German foreign investment control regime in mid-July.
The acquisition agreement had already been signed in December 2017. The foreign investment control review proceedings have been opened in March 2018 after preliminary discussions and filing of an application for a non-objection certificate in February 2018.
The transaction is subject to review based on the German Foreign Investment Control Regulation (AWV) if the designated investor is from a non-EU/EFTA country and wants to acquire a stake of 25 % or more. In case of the participation in TRIMET Automotive by KWM client Bohai, the German ministry opens full review proceedings. The intensive accompaniment by the KWM team was successful in the end. Following intensive discussions, the German ministry announced on 17 July 2018 that the acquisition of shares in TRIMET Automotive by Chinese Bohai does not meet any concerns with respect to public order or security.
The target company TRIMET Automotive is active in the area of development, manufacturing, processing and sales of sophisticated metal products for the automobile industry, in particular of aluminium products in form of high pressure and gravity die castings. Manufactured products include engine blocks, structural components, clutch and gear housings as well as oil pans. Bohai is a listed company whose relevant shareholders are the state companies BAIC and BHAP. BAIC was founded in 1985 and is one of the largest producers in Chinese automobile industry. BHAP was founded in 2008 and is today one of the leading manufacturers of automotive parts in China.
Counsel Dr. Tilmann Becker, who has accompanied this as well as other foreign investment control proceedings for Chinese investors in close dialogue with the German ministry for Economy and Energy, comments: „We are very happy that we could successfully advise our client Bohai on its participation in TRIMET Automotive not only with respect to the negotiations but also during the foreign investment control proceedings that have recently become a critical hurdle in particular for state-owned foreign investors. We are extremely pleased that we could get clearance for our client in this respect.”.
Wang Kaiding adds „The completion of this cross-border transaction is a great success. The advice to our client Bohai has again demonstrated the fantastic cooperation with our colleagues in Germany as well as the unique position of KWM for handling German-Chinese Transactions professionally.”
Advisor Bohai Automotive Systems CO, LTD.:
King & Wood Mallesons, Europe
King & Wood Mallesons, China
- Wang Kaiding (Partner), Huang He (Senior Associate), Huang Mengting (Associate), Huang He (Associate), Tang Xinran (Associate) (all Corporate Law/M&A)
- Song Yanyan (Partner), Dong Yun (Associate), Wu Yichen (Associate), Hu Mengyao (Associate) (all Corporate Law/Security)
- Liu Cheng (Partner), Bi Yun (Associate) (both Anti-Trust Law)
- Su Meng (Partner), Wang Jialin (Associate), Yi Zhongyun (Associate) (all Financing)