M&A is an effective way to achieve fast growth for domestic enterprises and foreign investors in China, but the surge in activity is a one-sided affair.
Felix Gao finds out why
Mergers and acquisitions (M&A) activity is red-hot in the domestic market at the moment. According to data from Zero2IPO Research, domestic M&A hit a record high in both amount and total trading value in the first quarter of 2016.
But international interest is lukewarm at best; so why the difference in demand? Legal experts point to a distinct chill in the air related to uncertainty over a raft of regulatory developments, and warn there is also a large number of terminated or suspended M&As and reorganization deals that serve to remind enterprises to pay more attention to the legal risks.
Domestic markets have been ablaze with high-profile deals of late. In March 2016, China Resources Beer acquired SABMiller’s 49% interest in their joint venture CR Snow in a US$1.6 billion deal that would give it full ownership over Snow, the world’s best-selling beer.
Then there is Baosteel Group, China’s second-largest steel maker, in the middle of strategic restructuring plans with Wuhan Iron and Steel Group that could potentially create a new industry giant to unseat Hebei Iron and Steel Group as the country’s biggest producer.