China’s M&A activity likely to rise in 2018 after 2017 downturn, PwC report says

China’s M&A activity is expected to rise in 2018, in spite of a downturn in 2017, a report released by consulting firm PwC showed on Tuesday.

M&A activity in 2017 was down 11 percent year-on-year in terms of value to $671 billion, which was largely attributable to a reduction in overseas deals.

China’s M&A activity had reached a record high in 2016, with a total value of $753.5 billion.

“While deals are down by both value and volume compared to a bumper 2016, the trend is still strongly upward on a five-year view,” Wei Guo, PwC China transaction services partner, said in a note sent to the Global Times, adding that the number of deals was still the second-highest ever in 2017, as all of the main drivers of M&A activity are still in place.

The report pointed out that the number of mega-deals (those with a value in excess of $1 billion) declined from 103 in 2016 to 89 last year, and this was also down to the drop in overseas deals.

Technology, industrial and consumer products continue to be the main sectors targeted in outbound deals.

The main aim is to bring technologies back to the domestic market in order to upgrade the industrial base, as well as to introduce new intellectual property, brands and products to China, the report said.

With greater policy clarity, outbound M&A deals are likely to resume their growth trend, it said.