Plan to speed up cross-regional M&As
By Richard Fu |
September 7, 2010, Tuesday
|
Print Edition
Print Edition
CHINA will scrap rules that limit cross-regional mergers and acquisitions to promote consolidation and accelerate restructuring, the State Council, or Cabinet, said.
Any rules that are not conducive to M&A and could impede fair play, especially those designed by regional governments to prevent outside companies acquiring local firms, should be removed, the Cabinet said.
Local governments have been a major obstacle in many cross-provincial merger deals as they fear losing tax revenue and other benefits, though the central government has long called on companies to consolidate into stronger enterprises able to compete globally.
Consolidation progressed slowly in many sectors. In the highly fragmented steel sector, most of the deals were made in one province, although Shanghai-based Baosteel Group Corp has acquired rivals in Xinjiang and Guangdong.
In opinions posted on the central government's website yesterday, the State Council tried to offer some solutions. For example, local governments may sign agreements to split tax income and other interests from companies formed through cross-regional M&As.
The State Council said auto, cement, steel, machinery, rare earth and aluminum industries will be central for cross-regional M&As.
It also said it will ease the entry threshold for private capital in industries where it is not banned, such as infrastructure and financial services.
Any rules that are not conducive to M&A and could impede fair play, especially those designed by regional governments to prevent outside companies acquiring local firms, should be removed, the Cabinet said.
Local governments have been a major obstacle in many cross-provincial merger deals as they fear losing tax revenue and other benefits, though the central government has long called on companies to consolidate into stronger enterprises able to compete globally.
Consolidation progressed slowly in many sectors. In the highly fragmented steel sector, most of the deals were made in one province, although Shanghai-based Baosteel Group Corp has acquired rivals in Xinjiang and Guangdong.
In opinions posted on the central government's website yesterday, the State Council tried to offer some solutions. For example, local governments may sign agreements to split tax income and other interests from companies formed through cross-regional M&As.
The State Council said auto, cement, steel, machinery, rare earth and aluminum industries will be central for cross-regional M&As.
It also said it will ease the entry threshold for private capital in industries where it is not banned, such as infrastructure and financial services.
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