Netherlands to introduce ‘security check’ for takeovers

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The Dutch government is seeking to introduce a “security check” for investments, mergers and acquisitions that might threaten national security interests, the cabinet said on Friday.

The proposed law must be approved by parliament. If enacted, it would be the latest in a series of moves taken by The Hague to prevent takeovers of Dutch companies, especially by foreign firms, that it sees as undesirable.

A law giving the government power to block takeovers in the telecommunications sector was enacted in March 2020.

The new law would cover “enterprises for which there is no sector-specific vetting and when changes in ownership could form a risk for national security,” the cabinet said in a statement.

The Dutch government has sought greater power to block foreign takeovers it deems unwanted since 2013, when Mexico’s America Movil unsuccessfully tried to buy the country’s leading telephone company, KPN.

In 2017, the government scrapped plans to give itself outright powers to block foreign takeovers due to concerns it would harm the business climate, and conflict with European law.

Unlike the 2017 effort, the law proposed Friday would apply to both foreign and domestic buyers of Dutch companies.

“Investors in companies that provide vital services, and companies with sensitive technologies, if they desire a change of control, will have to report to the Ministry of Economic Affairs’ Bureau for Vetting Investments,” the cabinet said.

That bureau will be empowered to attach conditions to a takeover or block it, it said.

KPN, which has extensive ‘poison pill’ mechanisms to deter unwanted suitors, said in May it had rejected unsolicited takeover advances from EQT and KKR as they would not “provide tangible and material added value” over KPN’s own business plan.

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