Italy Annuls Sale of Drone Company to Chinese Investors

Italy has announced it will annul the 2018 sale of a company that makes military drones to Chinese investors. In 2020, the Italian government opened an investigation into the deal, which saw a 75% stake in Alpi Aviation sold to Chinese investors.

Rome decided to annul the deal after the investigation concluded the sellers should have informed the government about the transaction under Italy’s so-called “golden power” regulations aimed at shielding strategically important assets.

The case shows how easy it is for changes in corporate ownership to slip under the radar at a time when pressure is rising in the US and Europe to monitor potential risks to national security from Chinese investors.

The Chinese groups involved in the acquisition are China Corporate United Investment Holding (CCUI) and CRRC Capital Holding, which are in turn controlled by the Management Committee of Wuxi Liyuan Economic Development Zone and SASAC.

The deal was conducted through a chain of investment vehicles originating from a Hong-Kong based firm called Mars, which now holds 75% of Alpi Aviation.

The case became public in September, when Italian tax police disclosed they were looking into a possible breach of rules regarding the sale of military materials, saying six people were under investigation.

Police at that time said the deal was “clearly” a predatory investment in technology.

Lawyers for Alpi Aviation have previously said the sale of the stake was transparent and in line with all regulations.

Italy’s use of its golden power usually results in deals being approved with recommendations intended to preserve national interest.

Since the regulation was introduced in 2012, government authorities have blocked foreign forays into Italy just six times. Five of these headed off Chinese bids, and four have come since prime minister Mario Draghi took office just over one year ago.

Reuters, with editing by Neal McGrath

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Neal McGrath

Neal McGrath is a New York-based financial journalist. Neal started his career covering the Asia-Pacific region for the Economist Intelligence Unit, then joined Asian Business magazine. He's subsequently held a variety of editorial positions covering business, economics, finance and sustainability. Neal has lived and worked in Hong Kong, Singapore, Germany and the US.