Foreign Investment Control - the impact of Covid-19 and sectors to watch

As concern has grown that the economic fall-out from the Covid-19 pandemic may lead to foreign investors seeking to acquire undervalued strategic assets, national governments have been rapidly tightening their foreign investment control rules to protect sensitive industries, with a particular focus on healthcare. Meanwhile, the European Commission has urged Member States to make full use of their screening mechanisms in order to protect key healthcare and research businesses critical to the fight against the virus. Intense scrutiny and possible prohibition should be expected in these sectors.

But governments are also focussing on other opportunistic takeovers of companies suffering from the rout across the stock markets, and are expected closely to review takeovers of generally important companies, including critical infrastructure companies, key technology companies and national champions. Acquisitions of targets in other sectors which are not generally considered sensitive from an economic and political view are less likely to give rise to concerns – yet even for these transactions issues may arise in certain circumstances, and reflect a political climate which has become much more hostile to foreign investment over recent years.