Aixtron says has not received Obama decision on China deal

The logo of Aixtron SE is pictured on the roof of the German chip equipment maker's headquarters in Herzogenrath near the western German city of Aachen, October 25, 2016. REUTERS/Wolfgang Rattay/Files

FRANKFURT (Reuters) - Aixtron said it had not received a ruling from U.S. President Barack Obama about whether a takeover by China's Fujian Grand Chip Investment Fund (FGC) could proceed, clouding the troubled German chip maker's outlook.

Aixtron shares fell early on Friday following a report by Bloomberg that said Obama was poised to block the deal, citing sources.

Last month, the Committee on Foreign Investment in the United States (CFIUS) recommended that Aixtron's sale to the Chinese investment fund be stopped due to security concerns.

A company spokesman on Friday said if Obama formally blocked the deal, the transaction would be called off. Aixtron has said it would be forced to cut jobs and scale down if the transaction fails.

Aixtron shares were down 3.5 percent in early trading at 3.75 euros, well below Grand Chip Investment's offer price of 6.00 euros per share. The stock is hovering around a nine-month low and is one of the biggest decliners in the German technology index.

U.S. concerns over China gaining access to the production of gallium nitride - a powdery yellow compound used in light-emitting diodes (LED), radar, antennas and lasers which is grown using Aixtron-manufactured technology - was the main reason for the U.S. block, according to security sources.

Chinese Foreign Ministry spokesman Geng Shuang told reporters at a regular briefing on Friday that the deal was "normal commercial activity" and that China hoped the world would not interfere politically.

CFIUS never gives reasons for its decisions. But sources have previously told Reuters it blocked the $3.3 billion sale of Philips' lighting business, Lumileds, to a consortium of Chinese investors last January over gallium nitride concerns.

Another source told Reuters that Aixtron's nanotube technology acquired through its 2007 acquisition of a Cambridge-based company Nanoinstruments was a concern too. Their products also have military applications.

Analysts fear Aixtron has a bleak future as a stand-alone company as it struggles with overcapacity in a market dominated by Chinese buyers.

Tim Wunderlich, analyst at German brokerage Hauck & Aufhaeuser, said last month when it became clear the deal might be blocked that Aixtron needed a white knight from Europe or the United States to have a viable future.


(Reporting by Matthias Inverardi and Harro ten Wolde; additional reporting by Greg Roumeliotis in New York and Michael Martina in Beijing; editing by Edward Taylor and David Clarke)