$90

China Daily (Hong Kong) - - BUSINESS -

the value of ac­qui­si­tions that Chi­nese com­pa­nies have com­pleted so far this year

Chi­nese deal­mak­ers have com­pleted 170 Euro­pean ac­qui­si­tions worth $90 bil­lion so far this year, ac­cord­ing to anal­y­sis by UK busi­ness ad­vi­sory firm Deloitte.

That is 40 per­cent up on 2015 when 122 deals were fi­nal­ized. Deloitte’s anal­y­sis, which cov­ers the pe­riod to Nov 22, did not in­clude last month’s an­nounce­ment that Chi­nese on­line travel com­pany Ctrip is buy­ing UK-based travel search com­pany Skyscan­ner for $1.75 bil­lion.

In­clud­ing the Skyscan­ner deal, ac­qui­si­tions in 2016 were worth $90.35 bil­lion.

“I think there’s a strong view from Chi­nese busi­ness that they need to in­ter­na­tion­al­ize, with less reliance purely on do­mes­tic mar­kets,” said An­gus Knowles-Cut­ler, China Ser­vices Group chair­man for Deloitte.

“Skyscan­ner is the clas­sic kind of deal that ticks most of the boxes,” he told China Daily. “It’s the Chi­nese buy­ing an e-com­merce busi­ness in the UK, with strong man­age­ment that it will leave in place and that serves a Chi­nese mid­dle class that spends money on travel.”

Deloitte found that Ger­many at­tracted the big­gest num­ber of ac­qui­si­tions by Chi­nese com­pa­nies, with 34 deals. The UK was sec­ond with 32, then France with 21.

The av­er­age dis­closed deal value was $900 mil­lion, or $350 mil­lion if the mega-deal in­volv­ing ChemChina’s $43 bil­lion takeover of Swiss pes­ti­cides and seeds group Syn­genta, which is still sub­ject to reg­u­la­tory ap­proval, is ex­cluded.

Chi­nese com­pa­nies looked mainly to the UK to ac­quire stakes in fi­nan­cial ser­vices and the leisure in­dus­try, in par­tic­u­lar ho­tels and foot­ball clubs, while they looked to Ger­many to in­vest in high-tech man­u­fac­tur­ing.

Knowles-Cut­ler pre­dicted a strong 2017 in terms of in­vest­ment, with in­creased em­pha­sis on e-com­merce. He said that the UK ref­er­en­dum vote to leave the Euro­pean Union has not acted as a de­ter­rent among Chi­nese in­vestors.

“I’ve spo­ken to about 25 ma­jor Chi­nese busi­nesses over the last cou­ple of months since Brexit,” he said. “I would say over­all there’s a net pos­i­tive among Chi­nese busi­nesses about Brexit. Ster­ling has de­pre­ci­ated in value, as­sets and in­vest­ment op­por­tu­ni­ties are cheaper for in­vestors.”

Knowles-Cut­ler said that Chi­nese in­vestors will be look­ing for re­as­sur­ances from the UK govern­ment that the “Golden Era” of re­la­tions with China, in­au­gu­rated by for­mer Prime Min­is­ter David Cameron and Pres­i­dent Xi Jin­ping, will move for­ward.

“I think they are pos­i­tive about the new govern­ment’s at­ti­tudes to­ward China,” he said. “They took great heart from the last prime min­is­ter’s agree­ment on the Golden Era and they’ ll be look­ing to see if that at­ti­tude is go­ing to con­tinue.”

The num­ber of Chi­nese deals in Europe this year mas­sively out­does the 52 deals with dis­closed deal value of $8.2 bil­lion which were achieved by Euro­pean ac­quir­ers in China.

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