The German government bought a 20 percent stake in the electricity network firm 50Hertz, the economy and finance ministries said Friday, thwarting Chinese investors from buying into the strategic company.

"On national security grounds, the federal government has a major interest in protecting critical energy infrastructure," the ministries said in a joint statement, adding that it has therefore commissioned a public bank to take a stake as a "temporary measure".

According to media reports, China's State Grid has been in talks to purchase a 20 percent stake in the company that had been put up for sale by Australian infrastructure fund IFM.

The Chinese group had already sought to buy into the company earlier this year.

But their first attempt was blocked as 50Hertz's majority shareholder -- Belgian power transmission system operator Elia -- then snapped up the stake and expanded its holdings to 80 percent of the company.

Chinese companies have been going on a shopping spree across Europe, snapping up airports, harbours and engineering firms.

Berlin has viewed the purchases of high-tech German firms by Chinese companies skeptically, but current legislation allows it to block an investment from a non-EU country only if the investor wants to take 25 percent or more.

In the case of 50Hertz, the government has therefore had to stump up the cash itself for the stake in order to stop foreign investors.

hmn/ser

ELIA SYSTEM OPERATOR

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