In a sign of growing trade tensions between the US and China, a US government panel has stopped a Japanese materials company, Lixil, from selling its Italian cladding subsidiary to a Chinese architectural design and construction firm.
The decision concerns loss-making Permasteelisa, known for making cladding for landmark buildings such as London’s Shard and New York’s One World Trade Centre. It was bought by Lixil for €575m in 2011, and generates about 40% of its sales in North and South America.
Yesterday, Lixil’s share price fell when it revealed that a US government panel would not approve Permasteelisa’s sale to Shenzhen-based company, Grandland.
The €467m sale was agreed in August last year. At the time, Riccardo Mollo, Permasteelisa’s chief executive, said: "Combining Permasteelisa’s position as a premium leader in the market and Grandland’s industrial strength, will create a truly global leader in the curtain wall segment."
That is now in doubt after the decision by the Committee on Foreign Investment in the US, a group led by the Treasury Department that vets deals to check that US technology is not being transferred to a country that may threaten America’s national security. In August, President Donald Trump signed a law extending the committees powers.
Lixil said it was "considering future options".
Permasteelisa made a loss of €24m in the year to April 2017 from revenue of €1.4bn.
Lixil expects its profit to take $208m hit in the year ending March 2019 if the sale is called off, reports Nikei Asian Review.
"The trade war probably had an effect" on the American decision, Lixil Chief Financial Officer Sachio Matsumoto was quoted as saying by the Review.
The decision of the committee has caused some surprise – although a number of recent decisions have been targeted at China, they have usually been the technology sector, such as the 2017 decision to prevent Beijing private equity firm Canyon Bridge Capital Partners from buying Lattice Semiconductors.
Lixil owns a number of US brands, including American Standard kitchen and bathroom.
Image: Permasteelisa provided the cladding for London’s Shard (The Shard)