FountainVest Cancels EuroGroup Laminations Deal Amid Indian Regulatory Hurdles

A deal for Chinese private equity firm FountainVest to acquire a major stake in EuroGroup Laminations (EGLA) has fallen through due to the inability to secure foreign direct investment approval from Indian authorities, according to announcements made on February 16, 2026. The cancellation marks a significant setback for both companies and highlights the increasing complexities of cross-border transactions involving regulatory scrutiny in key markets.

Deal Details and Previous Approvals

In July 2025, FountainVest agreed to purchase a 45.7% stake in EuroGroup Laminations from EMS Euro Management Services at a price of €3.85 per share [2]. The agreement included a plan for EMS to reinvest 50% of the sale proceeds into a newly formed holding company jointly owned with FountainVest. This new entity was expected to control 55.3% of EuroGroup Laminations’ voting share capital upon completion, initially anticipated in the first half of 2026 [2].

Prior to the collapse of the deal, FountainVest had secured approval from the Italian government under its “golden power” regime, which allows the state to impose conditions on transactions involving strategic assets [2]. The Italian approval was granted with unspecified conditions [2]. FountainVest also reached an agreement to acquire Tikehau Capital’s 7.9% stake in the Italian group at the same price [2].

The Indian Regulatory Blockage

The deal’s failure stems from difficulties in obtaining foreign direct investment approval from Indian authorities [3]. According to a joint statement from EMS and FountainVest, negotiations to find alternative solutions that would comply with Indian legislation were unsuccessful [3]. The companies cited “complexities that arose during the process” as the reason for the impasse [3].

Market Reaction and Company Outlook

News of the deal’s cancellation triggered a significant drop in EuroGroup Laminations’ share price. Trading was briefly halted and the stock subsequently fell by approximately 56.5% to €1.54 per share [3].

EuroGroup Laminations stated that the termination of the agreement does not affect the company’s industrial and financial prospects [3], and confirmed its existing development plans.

About EuroGroup Laminations

Founded in 1967 near Milan, Italy, EuroGroup Laminations is a global supplier of stators and rotors used in electric vehicles and industrial machinery [2]. The company listed on the Milan stock exchange in 2023, raising €250 million at €5.50 per share, valuing the business at approximately €922 million [2]. However, its market capitalization has since declined due to factors such as slower-than-expected electric vehicle adoption and geopolitical disruptions to global supply chains [2].