[FT] Trung Quốc đạt kỷ lục M&A ra nước ngoài

China Inc: record outbound M&A

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China Inc’s rumbling appetite for foreign companies can be heard across the globe. This is not new. But what is new are stats from number-crunchers Dealogic revealing that the number of Chinese outbound mergers and acquisitions activity is at an all-time high. This year to date no fewer than 217 cross border deals have been struck by Chinese companies.

But while more hands are being shaken, less money is being exchanged.

The total value of M&A deals is down 11 per cent this year at $US24.3bn, in spite of a 29 per cent increase in the actual number of deals.

The chart below from Dealogic shows the change in volume and activity over the last 6 years.



In terms of value and activity 2008 was a record year for dealmaking. Chinese companies paid $41bn in the comparable year-to-date period for a total of 26 deals. Seeing the economic downturn as an opportunity to buy distressed assets at cheaper valuations, Chinese companies popped out of the woodwork to snap up assets in developed countries.

Many of the deals signed at the time were resource-related, and the latest Dealogic data shows the oil and gas sector still tops the China M&A charts three years on.  A total of US$7.3bn worth of oil and gas deals have been inked this year.

Cnooc’s planned acquisition of Opti Canada for $2bn, announced last week and  still subject to regulatory approval, is the biggest deal to date.

It may come as little surprise that resource-rich Australia has been the most popular destination for Chinese companies so far this year. A record of 34 deals for a total of US$4.5bn  made Down Under.

Data also shows Chinese acquisitions are broadening beyond the oil and gas sector. Chinese firms on the hunt for greater control of global supply chains, have been particularly active in tech and engineering sectors.

The biggest Chinese outbound deal this year so far was China National Bluestar’s acquisition of Elkem, a Norwegian silicon supplier for US$2bn. As the FT’s Peter Marsh recently noted, firms looking to move up the value chain are targeting businesses in Europe with expertise in machinery, materials and specialised components.

Australia’s title as number one destination for acquisitions is followed closely by the US, where 33 deals have been made, and a total of $2.3bn has exchanged hands.

Yet while China Inc may have a reputation for being flush with cash and hungry for global assets, this fact doesn’t seem to have helped Chinese companies in the negotiating room.

Chinese groups are still having to pay a higher premium – measured by market cap a month before the deal is announced – for target acquisitions compared to their competitors in other countries, according to Dealogic.

Chinese companies on average pay a 28.8 per cent premium (which is up from last year’s 27.2 per cent year-to-date). This compares to a US average of 25.6 per cent, Japanese average of 26.6 per cent, and broader EMEA of 25.6 per cent and Asia (ex China) 26.6 per cent.


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