DEALS M&As expected to surge in 2014
Optimism based on Chinese firms’ appetite for famous foreign brands
footprint such as Huawei Technologies Co Ltd, ZTE Corp, Haier Group and Li-Ning Co Ltd.
To date, Haier and Huawei have pursued global expansion via organic growth and have not succeeded at or even appeared to have considered megatakeovers. Huawei, with 70 percent of its sales outside mainland China, is unlikely to change course. The same is true of Haier.
Li-Ning, on the other hand, has not enjoyed the international success achieved by other leading Chinese corporate brands. Its global expansion desires remain undiminished. Growth via M&A may feature more prominently in its global strategy plans for 2014. Rumors have abounded for a while about a possible takeover of Peak Sports, but there’s been far less over acquisition of any major global rival.
Nike Inc and Adidas AG remain too strong, but major second-tier competitors, such as the US-based New Balance Athletic Shoe Inc, are well within LiNing’s takeover radar. New Balance has a history in mainland China that should make any post-acquisition integration of the company and its brand name relatively straightforward. Do not be surprised if, around spring 2014, Li-Ning announces the successful completion of just such a deal.
While any significant global economic recovery remains at best patchy, Chinese companies will seize any opportunity to expand internationally via cross-border M&A. Sluggish economic growth forecasts for 2014, therefore, should lead to a bumper M&A year.
Chinese companies’ global expansion is inevitable, and cross-border M&A of famous foreign companies and their brands offers by far the most attractive route. Expect more M&A excitement during 2014.
C. Larry Pope, president and chief executive officer of Smithfield Foods Inc, left, and Wan Long, chairman of Shuanghui International Holdings Ltd, shake hands before a news conference in Hong Kong on Oct 10. In May, China’s biggest meat processor, Shuanghui, bid successfully for US pork-processing giant Smithfield. Shuanghui’s takeover of Smithfield was valued at $7.1 billion.