Italy's Snam scraps German gas deal amid Berlin's concern over China

Italy's Snam scraps German gas deal amid Berlin's concern over China

Snam's Decision to Scrap the Acquisition

By Francesca Landini and Giuseppe Fonte

Background of the Deal

MILAN (Reuters) -Italian gas grid operator Snam said on Friday it has scrapped plans to acquire a minority stake in Germany's largest independent gas transmission firm, amid resistance from the German economy ministry.

Regulatory Challenges Faced

Berlin's concerns over the 920-million-euro ($1.1 billion) transaction stem from the presence of China's State Grid as an indirect investor in Snam, Reuters reported earlier in the day, citing two sources familiar with the matter.

Impact on Snam's Financial Outlook

The Italian group signed a deal in April to buy a 24.99% stake in Open Grid Europe's (OGE) owner Vier Gas Holding from Abu Dhabi's Infinity Investments, aiming to enter the German gas market, the biggest in Europe.

The agreement was terminated after a prolonged foreign direct investment review by Germany, Snam said in a statement, saying its proposed remedies to secure regulatory clearance were found inadequate by the authorities.

The company added that the development will not impact its full-year 2025 financial outlook.

Germany's economy ministry had been reviewing the deal since it was agreed. Its resistance reflects European governments taking a tougher stance against Chinese investment in Europe due to security concerns.

Snam would not pursue the acquisition "come hell or high water" amid the lengthy approval process, CEO Agostino Scornajenchi previously signalled.

Germany blocked an attempt by China's State Grid to buy a stake in power grid operator 50Hertz in 2018.

($1 = 0.8575 euros)

(Reporting by Francesca Landini in Milan, Giuseppe Fonte in Rome, Mrinmay Dey in Bengaluru, additional reporting by Andreas Rinke in Berlin; Editing by Susan Fenton and Cynthia Osterman)