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Mandelson calls for 'golden share' to block takeovers

The European Union is considering a 'golden share' system to protect strategic industries from unwanted takeovers by foreign state-run investment funds, EU Trade Commissioner Peter Mandelson said in an interview published Monday. 

Mandelson told Germany's Handelsblatt business newspaper that the EU needed a mechanism to protect key industrial segments, while at the same time avoiding the appearance of being protectionist. “The European desire to maintain control over politically sensitive and important industries could be achieved through the instrument of a golden share,” he said.

A golden share is a nominal share which is able to outvote all other shares in certain specified circumstances, such as a hostile takeover.

The British trade commissioner's remarks came after German Chancellor Angela Merkel last week called for an EU-wide plan to protect some companies from being taken over by foreign government-run funds. Concern has been growing at the interest in European companies shown by overseas state-run investment funds from China, Russia and Arab oil states. The funds have an estimated $2,500 billion at their disposal, according to the US investment bank Morgan Stanley. Golden shares have been used in the past by governments of EU member states to allow them to keep controlling voting rights in partially privatized companies.

Germany and France have considered such an option for the aerospace concern EADS, although the practice is frowned upon by the European Commission. “We have to find a way in which the EU has control over its key industries but at the same time remains attractive for foreign investors, including state-held funds,” Mandelson said. The trade commissioner said an EU-wide system would be better than allowing individual member states to apply their own ways of protecting strategic sectors. “There should be a division of responsibility between the EU Commission and the members states when it comes to using the golden share option,” he said, warning of “disastrous” consequences if the EU introduced a measure that could be used for protectionism. Mandelson rejected a system similar to the US Committee on Foreign Investments which vets foreign takeovers. He said this method had been used to block takeovers, even from EU companies. (