Carve-Outs and Capped Stakes: How Indian and Chinese Buyers Are Structuring Deals to Clear Europe's Screening Regime
Cross-border M&A into the EU no longer clears on antitrust grounds alone. A buyer from outside the Union now has to plan, from term sheet stage, for a second and sometimes a third gate: national foreign direct investment (FDI) screening, and - increasingly - the EU's Foreign Subsidies Regulation (FSR), a tool barely three years old that is now being used against exactly the kind of state-linked and platform-scale buyers most active in the market.
Three Indian and Chinese deals moving through Europe in 2025 and 2026 show what that looks like in practice, and - more usefully - what a buyer can do about it. None is a story about a deal simply being blocked. Each is a story about a specific structuring choice that let the deal proceed anyway.
1. Tata Motors and Iveco: carve out the sensitive asset, sell it separately
In July 2025, India's Tata Motors agreed to buy the civilian truck and bus business of Italy's Iveco Group for €3.8 billion (€14.10 per share). On its own, that is a large but fairly ordinary industrial acquisition. What makes it a useful case study is what happened to the rest of Iveco at the same time: its defence-vehicle unit, Iveco Defence Vehicles, was sold separately - not to Tata, but to Leonardo, Italy's state-linked defence group, for €1.7 billion.
The split was not incidental. Italy's “golden power” regime lets the government block or condition foreign acquisitions of companies it designates as strategic, and defence manufacturing sits at the centre of that list. Rather than litigate the point or seek a conditional clearance, the parties pre-empted it: the strategically sensitive half of the business went to a domestic, state-connected buyer before the foreign buyer's deal was even signed. Tata gets one of Europe's larger commercial-vehicle platforms and a genuine foothold in the EU market to sit alongside Jaguar Land Rover; Italy keeps a NATO-relevant manufacturing capability under domestic control; and the transaction as a whole cleared without a contested screening fight. Golden power clearance for the Leonardo carve-out - involving Italy's enterprise, defence and foreign affairs ministries and the Prime Minister's office - came through on 16 March 2026, with Leonardo completing that purchase the next day. The remaining, much larger step - Tata's own acquisition of the commercial-vehicle business - then moved to its securities-law stage: Consob cleared the tender offer document on 3 September 2026, on top of earlier approvals from the ECB, the UK's FCA, the Bank of Spain and India's SEBI, with the shareholder acceptance window running into late October and settlement expected around 30 October 2026. In other words, the strategic-sensitivity question was resolved first and separately, months before the ordinary public-takeover mechanics for the non-sensitive remainder were even finalised.
The lesson for a non-EU buyer eyeing an EU industrial group with any defence, dual-use, or critical-infrastructure exposure: identify the sensitive slice early, and consider whether selling it separately - to a domestic buyer, ahead of your own signing - is cheaper than trying to acquire it and negotiate remedies afterward. A pre-emptive carve-out is usually faster and more certain than a post-hoc condition.
2. Tencent and Ubisoft Vantage Studios: buy the economics, not the control
In March 2025, Tencent agreed to invest €1.16 billion for a 26.32% stake in Vantage Studios, a new Ubisoft subsidiary created specifically to hold three of the French publisher's flagship franchises - Assassin's Creed, Far Cry, and Rainbow Six. The deal closed in November 2025, valuing the subsidiary at €3.8 billion - comfortably more than Ubisoft's own market capitalisation at the time.
What is unusual here is not the size of the investment; it is what Tencent did not buy. The stake is explicitly structured as a non-controlling economic interest: Ubisoft retains exclusive control and consolidation of Vantage Studios, must hold a voting and capital majority for at least two years, and Tencent is locked out of increasing its position for five years. In exchange for giving up formal control, Tencent secured veto rights over major asset disposals and standard minority protections (first-refusal, tag-along/drag-along, and change-of-control put/call options).
This is governance engineering aimed squarely at a political and reputational problem rather than a legal one: Assassin's Creed and its siblings are treated in France as something close to cultural assets, and a Chinese buyer taking outright control of them would have been a very different conversation than a Chinese investor taking a large, capped, non-controlling economic ticket. The structure let a badly weakened Ubisoft - whose share price has lost the large majority of its value since its 2018 peak, hit by a string of commercial misfires - raise the capital it needed to fund AAA development budgets that now rival Hollywood blockbusters, without handing over the keys to its most valuable IP.
The lesson: where the sensitivity is more reputational and political than a hard FDI-screening trigger, the fix is not a separate buyer - it is separating economics from control within the same deal, with contractual protections substituting for governance rights.
3. JD.com and Ceconomy: the patchwork gets a new layer
JD.com's €2.2 billion voluntary offer for Ceconomy AG - the German parent of MediaMarkt and Saturn, with more than 1,000 stores across 11 European countries - is the least settled of the three, and that is precisely what makes it worth watching closely rather than writing up as a finished case.
German antitrust clearance came quickly, in September 2025. FDI approval from Germany's economics ministry took nine months longer, arriving in June 2026, and it came with real conditions attached: enforceable commitments to keep German customer data protected, plus monitoring and revocation rights that let Berlin claw back approval if JD.com breaches them. Austria and Spain have been running their own parallel foreign-investment reviews. And layered on top of all of that, the European Commission opened a formal Foreign Subsidies Regulation investigation into whether financing, tax incentives, and grants JD.com received from the Chinese state gave it an unfair advantage in the bidding process - the same instrument, and largely the same theory, the Commission has used against Gulf state-linked buyers elsewhere in the EU over the same period. The Commission formally opened that in-depth FSR investigation on 28 May 2026 and, under the regulation's 90-working-day Phase 2 clock, is due to reach a final decision around 2 October 2026. As of this writing, JD.com has submitted remedies to address the Commission's concerns, but rival retailers have pushed back on them as insufficient - meaning the outcome of this particular case is likely to land within weeks of publication.
Two things stand out. First, clearing the competition authority is now often the easy part; the real timeline risk sits in FDI screening and, increasingly, in the FSR. Second, there is no single “EU approval” for a deal of this size and shape - a buyer needs sign-off from each member state where the target has a material footprint, on that state's own timetable and own conditions, with no guarantee the terms will match. Well over a year after its offer was announced, JD.com is still negotiating the final gate - almost entirely because of this layered, uncoordinated review process rather than any commercial objection to the deal itself.
The lesson: for platform-scale buyers moving into consumer-facing sectors with EU-wide footprints, the FSR is no longer a theoretical risk to flag in a memo - it is now a live, second merger-control-style review running on its own clock, and it needs to be resourced and timed into the deal from day one, alongside - not after - national FDI filings.
What the three have in common
None of these deals was stopped outright, though only two have actually closed at the time of writing - JD.com's is still working through its final FSR gate. All three show an Indian or Chinese buyer, and its advisers, reading the specific sensitivity correctly - defence-strategic, culturally symbolic, or data/subsidy-related - and designing around it rather than hoping a generic compliance package would do. That is the real story of Asian M&A into the EU right now: the screening architecture has become genuinely multi-layered, but it is navigable, provided the structuring work starts before signing rather than after.
For Asian investors - and for the advisers structuring their entry into Poland and the wider EU - the practical takeaway is the same across all three sectors: map every layer of review (competition, national FDI, and now the FSR) against the target's specific sensitivities at the earliest possible stage, and be prepared to shape the transaction structure itself - through carve-outs, capped economic stakes, or binding data and governance commitments - around what each layer is actually trying to protect.
This article is for general information purposes only and does not constitute legal, financial, or investment advice. Nothing herein creates a client relationship or a duty of care. Readers should obtain qualified legal, regulatory, and financial advice specific to their circumstances and to the jurisdictions in which they are operating before taking any transactional or structural decisions.
