Aug. 11 – Chinese acquirers will spend $1.5 trillion buying companies and investing overseas in the next decade, 70% more than the previous 10 years, even as regulators at home and abroad block deals, China Investment and acquisitions will continue to be a significant force over the long term, the report said in a report released on 8 August 2017.
Government policies encouraging Chinese companies to invest in manufacturing capabilities, particularly for advanced technology, and international trade will help maintain deal flow, the report, which specializes in advising on mergers and acquisitions. Chinese buyers have spent about $880bn on assets in other countries in the last 10 years, according to the data. The success of China’s bidders will depend on their ability to overcome foreign countries’ concerns about national security and interest, which contributed to the failure of as much as $75bn in announced outbound deals in 2016, the report said in the report. China may also have to bow to international pressure to liberalize its markets, it said.
Regulators have generally blocked Chinese businesses’ bids for companies in industries seen as critical to their economies or national security, such as infrastructure and technology. Aixtron SE, the German semiconductor equipment maker, saw its planned sale to a Chinese-backed company collapse in December after the U.S. government opposed the deal. Push-back from the same group, the Committee on Foreign Investment in the U.S., led to the termination of Chinese firm GO Scale Capital’s $2.8bn bid for Royal Philips NV’s lighting unit, Lumileds. A rebound in M&A will also rely on a softening of the Chinese state’s stance toward large, overseas deals, which some in the government see as a threat to the country’s growth. Its regulators are assessing the dangers that these prolific acquirers, and the debt they’ve run up, pose to China’s banking system and economy.
Although there is a loud voice over slowdown China investment and acquisition overseas M&As in 2017, however, the situation isn’t so obviously, every moment there is China acquire or investment deal take place around somewhere in the EU or US, just recently, several significant China investment and acquisitions take place in August, 2017.
China investment case 1 – Fosun, Sanyuan to acquire French margarine maker St Hubert for $733m
Chinese conglomerate Fosun Group and Shanghai Stock Exchange-listed Beijing Sanyuan Foods Co., Ltd. have unveiled the plan to acquire French margarine maker St Hubert SAS for EUR625 million (US$733 million), according to China investment source on 1st Aug 2017. Sanyuan and Fosun have jointly signed a series of agreements with Europe’s Montagu Private Equity to acquire a 100% equity interest in Brassica TopCo S.A. and PPN Management SAS, the controlling shareholders of St Hubert, the company announced. With the investment, St Hubert will introduce advanced food production technologies to China, while Sanyuan will strengthen its product capability and increase its global competitiveness. “The proposed acquisition also introduces healthy and innovative foods into China and is aligned with the government’s policy to support and drive technological innovation,” said Guo Guangchang, chairman of Fosun. “This acquisition would represent an important and practical step towards China’s mixed-ownership reform. Through this strong partnership, we can maximize advantages of both Sanyuan and Fosun to optimize both parties’ competitiveness.” The proposed transaction will be submitted to St Hubert’s workers’ council and is subject to clearance from relevant competition and regulatory authorities.
China investment case 2 – China’s Didi Chuxing to invest and partner with Uber’s European rival Taxify
Chinese ride-sharing company Didi Chuxing has teamed up with Uber rival Taxify to grow its network across Europe, Africa and Asia, according to a report on 1 Aug 2017. The transport giant will collaborate with and provide investment to help Europe’s Taxify extend its reach across a range of markets from Hungary and Romania, to South Africa, Nigeria and Kenya. The partnership underscores Didi Chuxing’s tightening grip on the global transport market. Last year, the company bought Uber’s Chinese business and, at the start of this year, invested $100 million in rival business Lyft.
China investment case 3 – China Fosun’s joint-venture finalizes acquisition German Koller Beteiligungs GmbH
China Fosun and its joint venture Nanjing Nangang Iron & Steel United Co. Ltd. (Nanjing Nangang) announced on Aug. 3 that it has completed the acquisition of a majority stake in Koller Beteiligungs GmbH (Koller), a German lightweight automotive specialist headquartered in Dietfurt, Germany. It is the first overseas investment for Nanjing Nangang and the first overseas industrial investment in the automotive industry for Fosun. Koller owns production facilities in Germany, Hungary and Mexico. It produces injection molding composite parts and pressing tools, including the PUR-honeycomb sandwich panels for major European automotive companies, such as Volkswagen, Audi, BMW, Mercedes and Land Rover. As an innovation leader, Koller is the leading solutions provider for automotive manufacturers who are looking to reduce energy consumption and pollutant emissions by reducing the weight of the car. With support from its new major shareholder, Koller will both strengthen its market position in Europe as well as explore new production locations and expansion opportunities in China.
China investment case 4 – China HNA Group completes acquisition of majority stake in Frankfurt-Hahn Airport
China HNA Group announced on 9 Aug 2017 that it has completed the previously announced acquisition of an 82.5% equity interest in Frankfurt-Hahn Airport from the state of Rhineland-Palatinate. The transaction is valued at €15.1mn. HNA Group issued the following statement regarding the closing of the transaction: “We are pleased to complete the acquisition of Frankfurt-Hahn Airport, which we believe will accelerate the growth of our airport and airport services businesses. This strategic investment will also enable us to increase the value chain and services that we provide through our core global tourism and logistics verticals. We look forward to working closely with the local authorities, the region’s talented workforce and the community as we invest in Frankfurt-Hahn’s infrastructure to enhance its capacity. We believe the airport can become a leading hub of commerce between China and Europe in support of China’s “One Belt One Road” initiative. The closing marks the start of an exciting new chapter in Frankfurt-Hahn Airport’s history, and we are eager to be true partners in making that future a resounding success.”
China investment case 5 – China’s Tencent buys European soccer rights
A new broadcast rights deal secured by China’s Tencent Sports means Chinese fans can watch the UK’s FA Cup and top division soccer from Scotland, Italy and France on their phones and laptops over the 2017-18 season, according to China reporting on 11 August 2017. Tencent Sports paid an undisclosed amount to London-based media rights agency MP & Silva for the online streaming rights to hundreds of matches in the Scottish Premiership, Serie A, Ligue 1 and FA Cup. Tencent Sports is the sports entertainment branch of China’s tech giant Tencent, the firm behind social media app WeChat which has 938 million monthly active users in China and abroad. MP& Silva is a company with a majority stake owned by Beijing Baofeng Technology and Chinese financial services company Everbright Securities. The one-year deal sees the leagues join Tencent’s growing online sports streaming empire, which includes Germany’s Bundesliga and the UEFA Champions League. Tencent also has rights to broadcast matches from the United States’ National Hockey League and last year the firm signed a five-year extension to its streaming deal with the National Basketball Association, worth a reported $700 million dollars.
China investment and acquisitions – more to come
Under the encouragement of Chinese government related investment policies, Chinese investors continue spend more than trillion to invest and acquire overseas in coming decade which more than the previous period, as a report, which specializes in advising on mergers and acquisitions indicates recently. That is to say, we will see more significant China investments and acquisitions to take place in manufacturing capabilities, particularly for advanced technology, Chinese investors will spend a great deal on foreign companies in coming decade. For the List of China’s Mergers & Acquisitions in Germany Update is available upon request, please contact with DCCC, or email to: email@example.com