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February 20, 2019

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A flat year for M&As, but private firms busy

The value of China’s mergers and acquisitions in 2018 remained flat at US$678 billion, with record private equity activity offsetting the decline in outbound M&A, PwC said in its latest report.

Overall deal volumes increased 11 percent in 2018 from 2017. But total transaction value was flat in 2018 from 2017.

The number of mega-deals — those worth more than US$1 billion — in 2018 also remained flat, with significantly fewer large outbound transactions offset by a moderate increase in the number of mega-deals from PE and domestic strategic players, the report said.

“A mixture of headwinds and uncertainties have framed the landscape for transactions,” said Weekley Li, transaction services partner at PwC China. “The appetite for deals is still there but there have been shifts in focus behind the scenes.”

State-owned enterprises are making fewer overseas deals, focusing instead on internal restructuring and the domestic market. Private companies outspent their SOE counterparts for the third straight year. Europe continued to lead, with US$50.9 billion in deals, followed by Asia and the US.

Technology and consumer-related deals have attracted the lion’s share of activity, in line with government’s policy of encouraging the introduction of foreign technologies, brands and consumer goods into the China market, said Annie Qiao, transaction services partner at PwC China.

“The search for technology and brands means that given the dropoff in US deals, developed markets in Europe as well as some parts of Asia are now the biggest destination.”


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