UPDATE 2-China approves Merck KGaA's takeover of AZ Electronic
* China clears Germany's Merck takeover of AZ with conditions
* Merck must report any licensing deals signed in China
* Merck extends offer period to May 7 (Adds extension of offer period, acceptance level by April 30)
BEIJING, April 30 (Reuters) - China's commerce ministry has approved with conditions German liquid crystal maker Merck KGaA's planned $2.6 billion takeover of UK-listed AZ Electronic Materials.
Merck, the world's largest maker of liquid crystals used in TVs and tablet and smartphone screens, agreed in December to buy peer AZ to expand its range of specialist chemicals for hi-tech gadgets.
The conditions include Merck having to report to the ministry any licensing deals it signs in China, and also prohibit Merck from forcing Chinese customers to buy products from both companies, the ministry said on Wednesday in a statement on its website.
By Wednesday, 63.5 percent of shares in AZ Electronic had been tendered, according to Merck, which still fell short of the minimum acceptance level of 75 percent. If it does not reach that level, the offer will have failed under the current offer conditions.
Merck also extended the offer period to May 7 from May 2.
China is becoming increasingly influential in approving foreign takeover deals, as its fast-growing economy becomes an ever more important marketplace. It played a central role, for example, in the approval of Microsoft's purchase of Nokia's handset business.
AZ Electronic, which was originally part of German chemical company Hoechst AG, generates the bulk of its revenue in Asia.
Merck said on Wednesday it would update the market on Friday on its acquisition. (Reporting by Aileen Wang and Jonathan Standing; Additional Reporting by Marilyn Gerlach, Frank Siebelt and Maria Sheahan in Frankfurt; editing by Mark Potter and Keiron Henderson)