The German government has temporarily halted Chinese consortium headed by strategic investor IDG Capital Partners (IDG) to acquire Osram’s general lighting business LEDVANCE, and have put the deal under review, Reuters cited German magazine WirtschaftsWoche recent report.

IDG and lighting partner Forest Lighting (also known as MLS) proposed acquisition of Osram for EUR 400 million  (US $439.58 million) has been delayed over financial issues, according to the magazine this could delay the business transaction for another three to four months before it would be cleared by German authorities.

The German lighting giant Osram is seeking potential buyers for its LED bulb business, as it plans to shift its focus to LED chip and component business by investing EUR 1 billion in a new factory in Malaysia to make chips for LED lights.

Osram was expecting to complete the business transaction to Chinese investors by fiscal year of 2017, whether it can meet this projected deadline is uncertain at the moment.

German economy ministry responded to the report saying it was examining the deal as part of its standard procedure, declining to offer further details.

A source familiar with the matter told LEDinside that the Chinese investment consortium headed by IDG has been asked to submit documents to prove its acquisition of LEDVANCE does not involve national security or other highly sensitive technology. The deal is still ongoing.

There is a high probability that the Chinese consortium’s LEDVANCE deal will be approved by German authorities, since it involves Osram’s general lighting business division which does not touch upon more sensitive LED component, chip, or specialty lighting applications that could impact national security.

A precedent case in consumer electronic market has been Chinese electronic manufacturer Haier’s successful acquisition of GE’s Appliances in June this year, which fell through stringent U.S. government standards.

The untimely halt of LEDVANCE’s acquisition case came as German regulators became increasingly alerted by Chinese takeovers of key technologies, and recent announcement of putting on hold China’s Fujian Grand Chip Investment Fund’s acquisition of Aixtron over security concerns.

Germany’s Deputy Economic Minister Matthias Maching proposed to the EU and regional governments to ban German high tech companies from being acquired by non-EU investors, particularly guarding Chinese investors from merging companies.

German regulators have shown increasing concern after large Chinese household appliance manufacturer Midea absorbed German industrial robot maker Kuka for EUR 4.5 billion (US $5.04 billion) earlier this year, and LED chip maker San’an Opto showed interest in bidding Osram Opto.

Recent developments have cast a shadow of uncertainty over San’an Opto and other Chinese companies interest bid for German lighting giant Osram’s chip component business.

According to a recent Handelsblatt report, a group of Chinese investors are even rethinking whether they should fall back on talks with Osram, as German government suspicion and interference in Chinese takeovers of German companies grows.

San’an Opto stated earlier this month it had been in talks with Osram, but had not formed any solid agreements.

Osram shares on the German midcap index closed down 2.3% following the recent announcement.