National governments buying shares of weakened private corporations¶
Wednesday, April 8, 2020.
I read the article Germany bolsters corporate defenses against Chinese ‘predators’ (European officials worry coronavirus-weakened companies could be acquisition targets) by Jens Kastner (2020-04-03) via reddit.com.
“We will avoid a sellout of German economic and industrial concerns,” German Minister for Economic Affairs and Energy Peter Altmaier said last week as he announced plans for a fund to take stakes in or buy out local companies needing a lifeline. Cabinet colleague Andreas Scheuer had warned a day earlier of a possible “economic attack” by predatory foreign buyers. Their administration also launched a separate initiative to provide guaranteed liquidity to troubled companies. While introducing support funds for local companies, Spain, Italy and Australia have also been moving to tighten controls on foreign takeovers. “We are going to block foreign companies from taking control of strategic Spanish companies by taking advantage of the share price collapse,” Spanish Prime Minister Pedro Sanchez said on March 17.
My comment: Great news. The Corona crisis –of course– causes many private corporations to have problems, causing their share price to decrease. And –of course– also in other countries there are still people who are rich enough to use the opportunity and buy the weakened shares, hoping that they will recover again after the crisis. And –of course– we don’t want foreign shareholders to control a business that has strategic importance for our country. That’s a good opportunity to take over public control over those companies.
But let us be careful. Actually we should tell those companies more clearly “You want our help for keeping your business alive? Turn your business into a foundation to give us full public control over it, only then you’ll get our help!” The compromise of just buying some shares might replace one devil with another. If we pour public money into a business that is not full under public control, there is danger of having that money flow into the pockets of a group of private owners.