May 31 – China’s overall corporate mergers and acquisitions (M&A) deal volume will remain steady in 2019, Companies in high-tech and consumer product industries became the most popular M&A targets, according to a PwC report. Here are Chinese investors/ investment companies’ recent 5 major mergers and acquisitions (M&A) deals so far in 2019.
Deal 1 – CITIC Group acquires Czech assets of CEFC China Energy
China State-owned conglomerate CITIC Group has finally signed a contract with indebted CEFC China Energy to take over its Czech assets for EUR 147 million after a 10-month long dispute with the company’s creditors over the price of its assets. CITIC’s Rainbow Wisdom Investments units signed the deal with PricewaterhouseCoopers, the liquidator assigned to handle the company’s asset sales with the price agreed triple that of CITIC’s initial offer. Despite this, many of the company’s creditors are still dissatisfied with the offer and plan to challenge the deal with some believing that the Czech assets could be worth up to EUR 530 million.
CEFC China had in the past acquired a sprawling network of overseas assets through debt-fuelled investments. However, the company came under fire after its founder Ye Jianming was investigated by the Chinese government for economic crimes, leading to multiple downgrades in the credit ratings of the company’s units, triggering a debt crisis which rendered the company insolvent. Following CEFC’s insolvency, CITIC then came in to bailout the company, agreeing to takeover the former’s Czech assets and repay some of its debt. However, the deal for the company’s Czech assets could not be finalized due to disagreements over its valuation.
According to PricewaterhouseCoopers, valuing CEFC’s assets had been difficult due to the complex debt network between CEFC and its units and the limited information it had. Locked into this dispute, CITIC issued an ultimatum to CEFC’s creditors in March this year to accept its offer which was close to is appraised value of EUR 157 million by the end of the month, if not CITIC would then demand back the money it had provided in the company’s bailout which would further erode the value of the company’s remaining assets.
Deal 2 – Chinese investor consortium acquires Amer Sports
A consortium led by China’s leading manufacturer of sportswear Anta Sports is about to complete the purchase of Finnish sporting goods company Amer Sports, according to an announcement issued by Anta Sports Products Limited. Anta Sports published an offer in Helsinki to purchase all the shares of the Finnish Amer Sports. So far, with the shares tendered in the offer representing approximately 94.98 percent of all the shares and votes in Amer Sports (excluding shares held by Amer Sports or any of its subsidiaries), Anta has satisfied all of the terms and conditions of the tender offer, which entitles the Chinese company to complete the purchase. “The completion trades will be settled and the offer consideration will be paid to the shareholders who have validly accepted the Tender Offer in accordance with the terms and conditions of the Tender Offer on or about 29 March 2019,” Anta said in a statement.
Amer owns world famous sports brands such as Wilson, Arc’teryx, Atomic and Salomon. The successful acquisition will enable Anta, which has a brand portfolio including ANTA, FILA, DESCENTE, SPRANDI, KINGKOW and KOLON SPORT, a greater global exposure and influence. Besides Anta Sports Products Limited, the consortium also consists of investment fund FountainVest Partners, Canadian Anamered Investments and Chinese Tencent. Anta has 58 percent ownership in the consortium.
Deal 3 – China’s Ant Financial acquires WorldFirst for $700 million
Ant Financial, an Alibaba affiliate, announced on 14 Feb it has taken over UK-based international payments group WorldFirst, marking the most significant foreign fintech acquisition by the Chinese financial services company. Ant Financial, operator of the world’s leading payment platform Alipay, said in a statement that Alipay will work with WorldFirst to better serve global small businesses, promote inclusive finance and contribute to sustainable development in the world.
WorldFirst, now a wholly-owned subsidiary of Ant Financial, will continue to be headed by co-founder and CEO Jonathan Quin. The UK-headquartered company will continue its regulated business with global operations, including in the Chinese mainland and Hong Kong. Quin wrote in a letter to its customers that the products and services of Alipay and WorldFirst are highly complementary and that WorldFirst will be able to offer even better products and services by becoming part of a larger group. “By combining WorldFirst’s award-winning currency account, international payments and currency exchange products with Ant Financial’s range of financial technology solutions, we will advance our shared aims of building the best global platform for international trade and bring fast and affordable services to individuals, small and medium-sized businesses and online merchants around the world,” Quin wrote.
Deal 4 – Chinese company buys 60% stake in Peru port
COSCO Shipping Ports Ltd has reached an investment agreement with Volcan Compañía Minera SAA, a Peruvian polymetallic miner, to acquire 60 percent of its stake in Terminales Portuarios Chancay SA for $225 million. With an initial payment of $56 million, this deal was sealed in Davos, Switzerland, on Wednesday, the Chinese company said in a statement on 24 Jan.2019 After the acquisition, Chancay terminal will become the first terminal project controlled by China COSCO Shipping Corp－the parent company of Hong Kong-headquartered COSCO Shipping Ports－in South America, as well as the group’s second greenfield port project invested overseas. Volcan is a Peruvian polymetallic miner engaged in the exploration and production of zinc, copper, gold, silver, and lead in Peru’s Sierra Central region. In addition to mining business, the company also operates ports, logistics companies and hydroelectric power plants in the country.
Located at Chancay Harbour in central Peru and about 58 kilometres from the country’s capital Lima, Chancay terminal boasts an exceptional geographic location and is connected with the economic centre of Peru by convenient traffic. It is a natural deep-water harbour with a maximum of 16-meter water depth and is capable of meeting the needs of mega vessels. The construction of Chancay terminal includes multipurpose terminals, container terminals and related infrastructure facilities. Phase one of the terminal will have four berths, of which two are multipurpose berths, and two are container berths with a total annual designed capacity of one million TEU, or twenty-foot equivalent units－an industry measure of cargo capacity. Xu Lirong, chairman of China COSCO Shipping, said the business move in Peru, which covers the entire logistics industry chain, will not only embody the company’s coordinated development, but also inject vitality into target countries and regions.
After the acquisition, COSCO Shipping Ports and Volcan can fully utilize their resources and capabilities to jointly build Chancay terminal into a major gateway port in Peru. It will facilitate trade between Peru and China, and between China and Latin America while creating jobs, services and infrastructure investment opportunities, said Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation. Zhang Wei, vice-chairman of COSCO Shipping Ports, said the investment in Chancay terminal will enable the company to further extend its reach to South America. The terminal will also help cut Peru’s deficiency in port infrastructure. “The two companies will make full use of their advantages to build Chancay terminal into a key hub in South America, the most important logistics centre on the Pacific coast, and a major platform that serves bilateral trade,” he said. COSCO Shipping Ports’ terminal portfolio covers the five main port regions on the Chinese mainland, Southeast Asia, the Middle East, Europe and the Mediterranean. By the third quarter of 2018, it operated and managed 282 berths at 36 ports worldwide, of which 192 were for containers, with a total annual handling capacity of approximately 104 million TEU.
Deal 5 – China’s Masterwork Group to become largest shareholder of a German firm
China’s Masterwork Group (Based in the Chinese city of Tianjin, Masterwork is China’s largest manufacturer of die-cutters and hot-foil embossing machines ) has announced it intends to obtain an 8.46 percent stake of Heidelberger Druckmaschinen AG (Heidelberg is a world-leading manufacturer of offset printing equipment, established in 1850) by way of cash subscription. The proposed investment, subject to approval by Heidelberg’s supervisory board, will make a wholly-owned subsidiary of Masterwork the largest shareholder of the German precision mechanical engineering company, according to Masterwork. With the issue price of the new shares set to be 2.68 euros ($3.06), the total investment will be worth about 68.99 million euros ($78 million).
The two sides have also signed a strategic cooperation agreement, aiming to accelerate their digital push in the packaging printing industry, according to Masterwork. “We are delighted that in Masterwork we are obtaining another long-term investor that firmly believes in the company’s innovative prowess, strategy, and potential for the future,” Heidelberg CEO Rainer Hundsdorfer said. “We believe that the strategic investment will enhance our partnership and make contributions to the development of high-end equipment manufacturing in China as well as the world,” said Li Li, president of Masterwork.
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