US Aims to Block Chinese Takeover of Ukraine's Main Aero Engine Firm

Ukrainian State Holding, Chinese Firms Strike Deal to Jointly Control Motor Sich

(Source: Ukraine Business Online; issued Aug. 21, 2019)

Ukrainian state military industrial corporation Ukroboronprom and Chinese firms Skyrizon Aircraft and Xinwei Technology Group reached an agreement to jointly control Motor Sich, Interfax-Ukraine reported on Aug. 19, citing anonymous sources in the government.

The Chinese firms will control a more than 50% stake in Ukraine's largest producer of aircraft engines, and will grant USD 100 min to Ukraine’s aviation industry, while Ukroboronprom will have a more than 25% stake. The deal is yet to be approved by Ukraine’s Antimonopoly Committee, Interfax-Ukraine reported.

A Chinese citizen who was the owner of Beijing Skyrizon Aviation Industry Investment, a Chinese company, tried to purchase a stake of up to 48.8% in Motor Sich from its president Viacheslav Boguslayev in 2016, but the deal has been blocked by Ukraine’s Security Service, which also froze all Motor Sich shares from trading in April 2018.

The Chinese firms were planning to construct an engine assembly plant on Chinese territory with the use of Motor Sich parts and technologies, which Ukraine’s law enforcement bodies considered to be a threat to the country’s security.

Concorde analyst Alexander Paraschiy added: “This business deal can only be welcomed by the investment community. The situation with the alleged security threats and share freeze was very strange, damaging the country’s investment image, particularly among the Chinese. It was also especially damaging for the image of Motor Sich, among the few Soviet-era military producers in Ukraine that preserved their scientific potential.

“Motor Sich should be able to help revive the stalled local stock market after a positive decision by the Antimonopoly Committee and redistribution of shares among Chinese and Ukrainian companies.”

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U.S. Aims to Block Chinese Acquisition of Ukrainian Aerospace Company (excerpt)

(Source: Wall Street Journal; published Aug. 23, 2019)

By Brett Forrest

WASHINGTON --- U.S. national-security adviser John Bolton is seeking to scuttle the pending Chinese acquisition of a Ukrainian aerospace company on grounds that it will give Beijing vital defense technology, according to senior U.S. administration officials familiar with the matter.

Mr. Bolton’s personal interest and involvement in the deal, acknowledged by the senior administration officials, underscores the growing importance of this case to the U.S. national-security establishment.

The company, Motor Sich, is one of the world’s foremost manufacturers of helicopter and airplane engines, and for years has supplied engines for the bulk of the Russian military-helicopter fleet. A sale to a group of companies, including Beijing Skyrizon Aviation, controlled by Chinese businessman Wang Jing, is pending.

Staffers at the National Security Council and the U.S. Embassy in Kiev are working to schedule a meeting between Mr. Bolton and the aerospace firm’s chief executive next week in Kiev, where Mr. Bolton plans to attend a security conference, a senior administration official said.

“We are going to have a conversation with the Ukrainians about China’s ambitions and what our view is of what China’s up to,” said another senior administration official. “This is all part of the national-security strategy and the national-defense strategy. It’s a strategic competition with China.”

Ukraine is a strategic U.S. ally in the region, and was the recipient of $250 million in U.S. military aid this year. Donald Winter, a former secretary of the Navy, was appointed this year as the Pentagon’s senior defense-industry adviser on Ukraine. (end of excerpt)

Click here for the full story, on the Washington Post website.

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