Dutch block US takeover of Solvinity as against public interest

By Stephanie van den Berg ‌and Toby Sterling

THE ​HAGUE, May ​26 (Reuters) - The Dutch government on Tuesday blocked Kyndryl’s 100 million euro ($113 million) takeover of cloud services provider Solvinity, citing public interest concerns after advice ‌from the agency that screens foreign investments.

The decision comes amid a ⁠broader push in the Netherlands and Europe for greater digital sovereignty, with governments seeking to retain domestic or ‌European control over critical cloud, ‌data and digital infrastructure.

It is the first time the Dutch Investment Screening Bureau has blocked a U.S. acquisition since it was set up in 2020. The proposed ​deal drew opposition from lawmakers and activists because Solvinity provides infrastructure for DigiD, the digital ID system Dutch citizens use to access sensitive medical, pension and tax ⁠information.

The government did not detail why U.S. ownership was deemed against the public interest. Critics had warned it could expose ​the company to pressure from U.S. authorities, including legal or intelligence demands.

"The Netherlands attaches great importance to the presence of foreign technology ​companies, including explicitly American technology companies, and to ‌their contribution to the Dutch economy and digital infrastructure," Junior Economic Affairs Minister Willemijn Aerdts said in a letter to parliament announcing the ⁠decision.

"At the same time, the Netherlands applies an independent investment-screening framework under the Undesirable Control in Telecommunications Act that is aimed solely at protecting the public interest and applies equally to all ⁠investors, regardless of their country of origin."

Kyndryl, the former infrastructure services division of IBM, said it was "extremely ​disappointed" with the decision.

"The politicization of this process has overshadowed the clear and important benefits this transaction would have brought to Solvinity’s customers and Dutch citizens," a spokesperson said.

Solvinity said it remained ‌in discussions with authorities over concerns about "national security, digital sovereignty and the protection of critical Dutch infrastructure".

A spokesperson for Aerdts said the ‌government would not comment beyond the letter, which said Aerdts was willing to brief lawmakers confidentially.

Reviews ⁠and decisions by the Investment Screening ‌Bureau, like those of the ​Committee on Foreign Investment in the United States (CFIUS), are confidential.

(Reporting by Stephanie van den Berg and Toby Sterling. Editing by David Goodman and ‌Mark Potter)

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