China will review M&A deals with foreign firms
Source: Agencies |
February 13, 2011, Sunday
|
Print Edition
Print Edition
China will launch a state-level investment review body to ensure merger and acquisition deals struck by foreign firms in the country do not endanger national security, the State Council, or Cabinet, said yesterday.
The new regulation will come into effect in March.
Foreign investments in military, agriculture, energy and resources, key infrastructure, transport systems, key technology sectors and "important equipment manufacturers" may be subject to reviews, according to a statement published on www.gov.cn.
The review will be conducted by a "foreign investment security review board" under the Cabinet. Members of the board will come from the National Development and Reform Commission, the Ministry of Commerce and other agencies on an ad hoc basis.
China introduced an anti-trust law in 2008 and has blocked deals that do not conform with its national plans.
China rejected Coca-Cola's US$2.4 billion bid for the country's top juice maker Huiyuan in 2009 and buyout giant Carlyle's US$375 million bid for Xugong, the nation's biggest construction equipment maker, in 2008.
The government has also blocked several foreign attempts to buy into its huge steel sector.
In 2007, it blocked ArcelorMittal from gaining a majority stake in China Oriental Group and in 2009 it forced Russia's Evraz Group to abandon an option to take control of Delong Holdings Ltd, a Chinese steel maker listed in Singapore, in a US$1.5 billion deal.
China attracted US$105.7 billion in foreign direct investments in 2010, 17.4 percent more than in 2009.
According to the new regulation, Chinese government agencies, trade associations, competitors, suppliers and other related parties are allowed to apply for review of a foreign-related M&A deal.
The process will include two parts - a general review and a special review.
Deals that fail the general review will undergo a special review that may last up to 60 days.
The government can terminate a deal that could potentially threaten national security.
The new regulation will come into effect in March.
Foreign investments in military, agriculture, energy and resources, key infrastructure, transport systems, key technology sectors and "important equipment manufacturers" may be subject to reviews, according to a statement published on www.gov.cn.
The review will be conducted by a "foreign investment security review board" under the Cabinet. Members of the board will come from the National Development and Reform Commission, the Ministry of Commerce and other agencies on an ad hoc basis.
China introduced an anti-trust law in 2008 and has blocked deals that do not conform with its national plans.
China rejected Coca-Cola's US$2.4 billion bid for the country's top juice maker Huiyuan in 2009 and buyout giant Carlyle's US$375 million bid for Xugong, the nation's biggest construction equipment maker, in 2008.
The government has also blocked several foreign attempts to buy into its huge steel sector.
In 2007, it blocked ArcelorMittal from gaining a majority stake in China Oriental Group and in 2009 it forced Russia's Evraz Group to abandon an option to take control of Delong Holdings Ltd, a Chinese steel maker listed in Singapore, in a US$1.5 billion deal.
China attracted US$105.7 billion in foreign direct investments in 2010, 17.4 percent more than in 2009.
According to the new regulation, Chinese government agencies, trade associations, competitors, suppliers and other related parties are allowed to apply for review of a foreign-related M&A deal.
The process will include two parts - a general review and a special review.
Deals that fail the general review will undergo a special review that may last up to 60 days.
The government can terminate a deal that could potentially threaten national security.
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