The Thai acquisition of a German company

Articles recently published on LinkedIn

Articles recently published on LinkedIn

Update 2020 – the gates are closing

Germany is in the process to further tighten foreign investment rules. This concerns primarily artificial intelligence, robotics, semiconductors, biotechnology, and quantum technology. However, it will generally introduce a prohibition on implementing notifiable acquisitions prior to clearance and lower the requirements for a prohibition of investments. PUGNATORIUS Ltd. assists Thai companies in cooperation with an influential German law firm on things to be done to get the deal through before the gates close.

German companies in the cross line of Thailand’s conglomerates

German companies are more and more interesting targets for Thai corporate buyers. Prominent acquisitions of German businesses by Thai buyers are 

  • Fico group (Srichawla family) investing  Euro 80 million in a portfolio consisting of eight hotels in Germany (and one in Belgium) in 2014.
  • Central Group acquired KaDeWe, Oberpollinger, and Alsterhaus department stores in 2015
  • Thai Union Group acquired Rugen Fisch AG with its key brands Hawesta, OstseeFisch and Lysell in 2016.
  • CP group (Charoen Pokphand) acquired meat distributor Paulsen Food GmbH for Euro 12 million in 2017.
  • Indorama Ventures PLC (IVL) acquired German airbag yarn producer UTT Technische Textilien GmbH & Co. KG in 2019.

The following overview describes certain legal aspects and considerations. 

Work-flow and steps of an acquisition process in Germany

#1. Identification of the target: German companies are formed as sole entrepreneurs, partnerships or corporations. The main targets for a Thai acquisition are


  • Aktiengesellschaft (stock corporation, similar to Thailand’s PLC)
  • GmbH (small limited corporation, similar to the Thai Co., Ltd.)
  • OHG (general partnership, not a legal entity under German legislation)
  • Kommanditgesellschaft (limited partnership, not a legal entity under German legislation)
  • GmbH & Co. KG (tax-driven limited partnership with a small corporation as general partner)

German companies require a special business license in exceptional cases only. These are banks, insurance companies, and some more.

#2. Due diligence: The key focus of the due diligence for a German company is to check the legal status of the target company (“good standing”), the validity of the target company’s shares to be acquired, relevant documents including the target’s certificate of incorporation, shareholders registration book as certified by the competent authority (if any), and legal requirements for the acquisition of the share certificates. An important aspect is the overall rationale of the acquisition. It can be the acquisition of the know-how with the intention to move the production base to Thailand. or it may be the intention to continue production in Germany and to apply the existing know-how also to Thailand’s markets.

#3. Foreign ownership restrictions: Germany tightens its foreign acquisition rules. Germany announced in December 2018 that it is preparing to tighten rules on non-EU purchases of shareholdings and the broader acquisition of its companies. To buy at least 10% of the stakes in German key technology firms will under the updated German Foreign Trade Regulation require governmental approval. This includes not only military, IT security, and power companies but any acquisition that could endanger the public order or security of Germany. The government wants to be able to intervene nationally, in individual cases, against state-controlled or state-financed strategic direct investments. It is a further tightening of the already strict rules under the mid-2017 legislation. 

#4. Deal structure: German legislation provides the option to acquire as a share or asset deal. The decision has significant implications on public law, labor law, tax laws and more.

#5. Legal opinion: During the acquisition process, legal opinion has to be provided, especially whether the buyer can become the shareholder of the Target or not, and whether the share transfer and share registration processes in Germany are valid and effective. Other points of interest are whether the process to be listed at Germany stock exchanges, the qualification of the company, and the estimated timeline to be listed, how the Thai buyer can monitor and control Target’s major shareholders to honor tag-along rights,  and whether the target’s shares have any encumbrances when the buyer needs to sell and/or exit from the transaction.

#6. Process: The legal transaction verification covers the registration of the acquisition of target’s shares in the shareholders’ registration book, the delivery of target’s shares to the buyer or its custodian, and evidence on share transfer and registration for the thai buyer’s share acquisition transaction

#7. Tax planning: Tax aspects of the acquisition process are outlined here.

Comprehensive professional services for the acquisition of German corporations and partnerships by Thai buyers

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of legal services and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property acquisitions and developments. Sophisticated solutions in a complex business environment. Serious legal and tax advice in the land of smile.

Thai buyers: The law firm supports Thai buyers in the identification of Germany’s technology and local market leaders, the so-called hidden champions, and the approach and transaction management of German target companies. With initial information on the acquisition process, in the selection and negotiation with the German investment bank, law firm, and M&A advisor, and in the communication with all German participants.

German targets: PUGNATORIUS Ltd. represents the legal and tax interests of German targets in the acquisitions process by Thai buyers. 

German law firms: Also, the law firm supports German law firms without a Bangkok office on the buyer’s or seller’s side during the whole acquisition process. 

Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship. 

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