Two Chinese state firms took control of an Italian military drone maker more than three years ago via an offshore company — without the knowledge of authorities in Italy and Europe, the Wall Street Journal reported Monday.The offshore company, Mars (HK) Information Technology, started the process of transferring Alpi’s technical and intellectual property to a new production site in China, the report said.Mars had in July 2018 bought a 75% stake in Italian drone maker Alpi Aviation for 4 million euros, or $4.6 million, the Journal reported.Mars also invested another 1.5 million euros in Alpi — an amount Italian police said was a significant overpayment, according to the report.Italian authorities are investigating the 2018 deal, including whether Alpi should have notified the Italian government of the stake sale, as well as whether Alpi had transferred technology and started production in China, according to the report.Police concluded that Mars was a shell company linked to two Chinese state-controlled firms, the Journal said.
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As of publication, Alpi and CRRC did not respond to CNBC’s request for comment on the report.Mars and the Wuxi investment group could not be reached for comment.The Journal, quoting a statement from Alpi, said the Italian drone maker denied it had broken laws on transferring strategic information and technology out of Italy.The company also said its stake sale was transparent and made at real value.European companies are generally required to report relevant foreign takeovers to authorities, such as when the deals involve security, according to the Journal’s report.The Italian government has the right to veto takeovers by non-EU buyers in industries deemed strategic such as defense and communications, the report said.
For more on the investigation into Alpi Aviation, read the full story on the Wall Street Journal..