Japanese investment giant SoftBank and Swiss engineering company ABB are reportedly exploring an alternative arrangement to rescue their proposed $5.4 billion robotics transaction after Chinese authorities blocked the deal.

The companies are considering separating the Chinese operations from the wider transaction to address regulatory concerns.

According to reports, the proposed restructuring would involve establishing a separate business entity for ABB’s Chinese robotics operations.

The new arrangement could have a different ownership structure, allowing the remaining parts of the acquisition to proceed without including the Chinese business.

The development follows increasing scrutiny by Beijing of foreign investments involving strategically important technologies.

Chinese authorities have become more cautious about transactions involving advanced robotics, artificial intelligence and other technologies considered important to national security and industrial development.

The proposed transaction represents a significant investment opportunity for SoftBank as it continues expanding its interests in robotics and artificial intelligence.

ABB’s robotics operations have considerable industrial applications, including manufacturing, automation and warehouse management.

If the restructuring succeeds, both companies could preserve much of the commercial value of the proposed agreement.

However, the final arrangement will depend on regulatory approval and negotiations over ownership and operational responsibilities.