China’s state planner has told Japanese investor SoftBank it will not allow the $5.4 billion acquisition of the robotics segment of engineering group ABB to go ahead, the Swiss firm said on Thursday.
The case marks the second major deal blocked by China this year after Meta (META.O) was ordered to unwind its $2-billion-plus acquisition of artificial intelligence startup Manus. The news comes as Beijing tightens scrutiny of foreign investment in domestic startups that are developing frontier technologies.
It also restrains SoftBank’s ambitions in the robotics industry, which Chief Executive Masayoshi Son has billed as a core component of its AI investment strategy.
The prohibition was first reported by the Financial Times on Thursday. SoftBank had expected the deal to go through until it was told last week that China’s National Development and Reform Commission (NDRC) had prohibited the acquisition, the report said.
The NDRC reviews foreign investments that might have national security implications.
SoftBank declined to comment. The NDRC did not immediately respond to a request for comment.
ABB shares were down 1.1% in morning trading after the blocked takeover was made public.
The NDRC was concerned about robotics data being transferred overseas, where it could be used to train AI models, including those developed by OpenAI, in which SoftBank is a major investor, the FT report added.
China and Japan have also been engaged in a diplomatic spat after comments from Japanese Prime Minister Sanae Takaichi on Taiwan in November last year, prompting China to severely limit exports of critical minerals to Japan.
ABB and SoftBank are in close dialogue and working on the transaction, ABB said.
China is ABB’s biggest robotics market, representing around 30% of its robot-related business. ABB operates about 30 local companies in China with around 15,000 employees located in nearly 130 cities, as well as online and offline channels in nearly 700 cities.
According to its website, ABB Engineering (Shanghai) is home to its global robotics headquarters and is an important research-and-development center and production base for ABB Group.
SoftBank shares were down about 5% before the FT report was published and they ended the day down 6.8%.
The blocked ABB deal comes less than a week after SoftBank-backed digital-payments company OPay withdrew a US initial public offering, citing a regulatory inquiry by a foreign jurisdiction it did not identify.
OPay would have raised $304 million from the IPO after pricing 16 million American depositary shares at $19 each earlier in the day.
Reuters
