(Yicai) Jan. 12 -- Defu Technology’s shares slid after the Chinese copper-foil maker scrapped a planned takeover of Circuit Foil Luxembourg, citing restrictive conditions set by that country’s government, and said it would instead pursue a similar deal at home.

Defu [SHE: 301511] closed down 9.1 percent at CNY32.26 (USD4.63) per share in Shenzhen today, after earlier plunging by as much as 12.4 percent.

According to a Jan. 9 notice from Luxembourg’s economy ministry, Defu would have been allowed to acquire only a minority stake in Circuit Foil Luxembourg, with minority voting rights and no veto power over management decisions, the Jiangxi-based company announced yesterday.

The notice also included a series of restrictions on Defu concerning corporate governance, intellectual property, trade secrets, and other key business matters related to Circuit Foil Luxembourg, the firm added.

As a result, Defu and Circuit Foil Luxembourg’s owner Volta Energy Solutions decided to terminate the acquisition deal, with the seller expected to return the deposit of EUR17.4 million (USD20.3 million) in full.

Last July, Defu signed an agreement to buy all of Circuit Foil Luxembourg for EUR174 million (USD200 million). Circuit Foil Luxembourg is one of the world’s leading high-end copper foil companies, boasting an annual production capacity of 16,800 tons.

Its products are used in data center infrastructure such as artificial intelligence servers, fifth-generation base stations and mobile devices. Its main production facilities are in Luxembourg, and it also has product slitting centers in China and Canada.

In a separate statement yesterday, Defu said it instead plans to buy a 51 percent stake in Huiru Technology, a Chinese developer, manufacturer, and seller of high-performance electrolytic copper foil, with an annual production capacity of 20,000 tons. The price will be negotiated after the completion of due diligence, it noted.

Strong demand has driven the company’s capacity utilization close to saturation, so this acquisition will quickly enhance its production capacity, enabling it to better meet customer needs, Defu said.

Editor: Futura Costaglione