Robotic response

German politicians want a local counter bid for Midea target Kuka

A Kuka technician programs a robot arm of German industrial robot maker Kuka in Hanover

China’s latest arms trade

In mid-2005 politicians in Washington lobbied frenetically against CNOOC’s $18.5 billion buyout of American energy firm Unocal. The political resistance forced the Chinese oil producer to withdraw. Unocal instead accepted a lower bid from Chevron and merged with its Californian counterpart.

Could something similar happen to Chinese appliance maker Midea, which is attempting a takeover of German robot firm Kuka?

That was one of the issues on the sidelines during Angela Merkel’s trip to China this week, her ninth visit as the German Chancellor.

Midea offered $5 billion for a controlling stake in Kuka last month. But as WiC reported at the time, the Chinese firm’s intentions have raised concerns because Kuka is regarded as one of the standard bearers of the German Mittelstand’s ‘fourth industrial revolution’ (see WiC326).

“We really need to think about whether we want to give such a key enterprise to the Chinese, or try to keep it in European hands,” Markus Ferber, a German member of the European Parliament, told the Financial Times this week. It would be better, he suggested, if Kuka was taken over by a European entity such as the Swiss group ABB.

That view has been gaining ground in Europe. Sigmar Gabriel, Merkel’s deputy, said earlier this month that efforts were under way “to come up with an alternative offer”, while there have been calls for the engineering firm Voith Group, which owns 25% of Kuka, to step up with a counterbid.

In a joint press conference with Chinese Premier Li Keqiang this week Merkel said that her government wouldn’t try to prevent the takeover. But she also left the door open to counter offers. “I still think there is an opportunity to come to a good solution,” she said. “And by the way, nobody in Germany is forbidden from getting involved with Kuka.”

As Reuters has noted, no German firms have come forward as suitors for Kuka thus far.

Premier Li stressed in the same press conference that the Midea-Kuka deal is a private sector issue that should proceed according to free market conventions. Chinese media has stayed silent on the deal, although Andy Gu, Midea’s deputy chief executive, told Germany’s Handelsblatt newspapers that he was surprised by the political resistance to the takeover.

“Our engagement in Kuka isn’t a political topic,” Gu said. “We are a private company.”

Meanwhile, Reuters turned its attention to some of the other acquisitions made by Chinese firms in Europe, including Sany’s $400 million takeover of Putzmeister, a concrete pump manufacturer.

When Sany acquired its German rival in 2012, Putzmeister’s workers protested outside the factory gates, fearing job losses. Four years on, Reuters says that the workforce in Germany has held steady – a status quo that Sany promised to maintain until 2020.

“I think if it were an American company, it would be a lot worse for the workforce,” Joerg Loeffler, head of the works council at Putzmeister, told the news agency.

Rather than moving production to China, Sany has been dividing up the market: selling its own pumps in China and the Putzmeister brand in the rest of the world. Putzmeister pumps still come with German-engineered parts sourced from its previous suppliers. Its sales are up by nearly a third.

However, Reuters has also noted that Norbert Scheuch, Putzmeister’s chief executive, left the company a year after the deal, because he became frustrated with his new bosses’ “hierarchy-driven management style”. Unable to make small talk in Chinese, Scheuch often felt shut out of decisions, Reuters explains. The former boss also described himself as the “party pooper”, who was forced to temper Sany’s unrealistic expectations for growth in European markets.

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