Milan — Italian gas grid operator Snam is set to abandon its planned acquisition of a minority stake in Germany’s largest independent gas transmission operator, sources said, amid resistance from the German economy ministry.
Berlin’s concerns over the 920-million-euro ($1.1 billion) transaction stem from the presence of China’s State Grid as an indirect investor in Snam, two sources familiar with the matter said on Friday.
Germany’s economy ministry, which is responsible for foreign direct investment clearance, has been reviewing the deal after it was agreed in April. Its resistance reflects European governments taking a tougher stance against Chinese investment in Europe due to security issues.
Germany’s economy ministry declined to comment. Snam was not immediately available to comment.
State Grid owns 35% of CDP Reti, an investment vehicle controlled by Italian state lender CDP, which in turn holds 31.4% of Snam, giving the Chinese state-owned group the right to appoint a representative on the board of the Italian gas grid operator.
The Italian group agreed in April to buy 24.99% of Open Grid Europe, aiming to enter the German gas market, the biggest in Europe.
The transaction, initially expected to close by the end of September, has been delayed as Germany extended its review and requested additional documentation from the Italian group.
Snam’s Chief Financial Officer Luca Passa said earlier this month the company hoped to get a decision from Germany by November 17, when an extended deadline to finalise the acquisition expires.
The group would not pursue the acquisition “come hell or high water” amid the lengthy approval process, Group CEO Agostino Scornajenchi previously signalled.
Germany blocked an attempt by China’s State Grid to buy a stake in power grid operator 50Hertz in 2018.
($1 = 0.8575 euros)
Reporting by Francesca Landini in Milan, Giuseppe Fonte in Rome, additional reporting by Andreas Rinke in Berlin; Editing by Susan Fenton – Reuters
