Out­bound M&As surge in both vol­ume and value

China Daily (USA) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

The vol­ume and value of out­bound merg­ers and ac­qui­si­tions by Chi­nese main­land com­pa­nies hit a record high in the first three quar­ters of 2016, a re­port by Price­wa­ter­house­Coop­ers showed.

Deal vol­ume, the re­port said, reached a record of 671, nearly dou­ble that for the whole of 2015, while deal val­ues to­taled $164.3 bil­lion, in­creas­ing 198.2 per­cent year-on-year.

ChemChina’s ac­qui­si­tion of Swiss seed and chem­i­cal group Syn­genta for $43 bil­lion was the largest one.

Carol Wu, PwC China trans­ac­tion ser­vices part­ner, said given the ex­ist­ing global eco­nomic sce­nario and do­mes­tic com­pet­i­tive land­scape, more and more Chi­nese com­pa­nies are opt­ing for over­seas M&As for both di­ver­si­fi­ca­tion and tech­nol­ogy up­grad­ing.

“Smooth fi­nanc­ing chan­nels in cap­i­tal mar­kets and fast­grow­ing fi­nan­cial in­vestors are the main rea­sons for the sig­nif­i­cant in­crease in the first three quar­ters,” saidWu.

Listed com­pa­nies ac­counted for more than 56 per­cent of the out­bound M&A trans­ac­tions, by deal amount, in the first three quar­ters of 2016.

By trans­ac­tion vol­ume, pri­vate­lyen­ter­prises were still the most ac­tive play­ers, clinch­ing449M&Adeals in the first three quar­ters. The fig­ure was nearly five times higher than the num­ber for Sta­te­owned en­ter­prises.

For the first time, pri­vate­ly­owned en­ter­prises sur­passed State-owned en­ter­prises in trans­ac­tion value, ac­count­ing for half of the to­tal over the first three quar­ters of 2016.

Smooth fi­nanc­ing chan­nels in cap­i­tal mar­kets ... are the main rea­sons for the sig­nif­i­cant in­crease in the first three quar­ters.” PwC China trans­ac­tion ser­vices part­ner

Carol Wu,

“Some pri­vately-owned en­ter­prises have com­pleted sev­eral deals, and in the process ac­cu­mu­lated worth­while ex­pe­ri­ences, which will be of long-term ben­e­fit to them,” saidWu.

Fi­nan­cial in­vestors be­came more ac­tive with 127 M&A deals made in the first three quar­ters, dou­bling the num­ber made over the whole of 2015.

Ma­ture mar­kets such as Europe and North Amer­ica con­tin­ued to be the main des­ti­na­tions for Chi­nese buy­ers of so­phis­ti­cated tech­nol­ogy, ad­vanced man­age­ment ex­pe­ri­ence and well-known brands. Asia was also pop­u­lar among in­vestors be­cause of the Belt and Road Ini­tia­tive.

PwC fore­cast that Chi­nese main­land out­bound M&A will keep­grow­ing­base­donthe2016 re­sults ben­e­fit­ing from en­cour­ag­ing poli­cies and the ren­minbi’s in­ter­na­tion­al­iza­tion.

The chang­ing in­ter­na­tional tax en­vi­ron­ment will raise new chal­lenges for risk con­trol and com­pli­ance pro­ce­dures, the re­port said.

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