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M&A deals involving Chinese companies drop in the second quarter
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Merger and acquisition activity involving Chinese companies slowed down in the second quarter as China’ buying spree in overseas markets lost momentum, industry data showed.
Value of China-related M&A deals amounted to US$146.4 billion in the second quarter, a 36.2 percent decline from the first quarter and down 34.1 percent year on year, according to data released by Thomson Reuters today.
That offset a blistering first quarter, which saw a more than 30 percent growth, and brought total deal value in the first half of the year to US$375.8 billion, up 2.8 percent from the same period last year.
Outbound acquisitions by Chinese companies amounted to US$111.6 billion in total value in the first six months this year, surpassing the US$111.5 billion for the whole year of 2015, data showed.
Outbound deals reached an all-time high during the first quarter, but the momentum seemed to be short-lived as outbound deal value dropped 64.3 percent in the second quarter.
Industry insiders said robust growth in the first quarter was partly due to carryover effect from 2015 when global economic restructuring and expectation about US dollar appreciation encouraged cross-border investments, however, overseas purchases by Chinese companies is facing increasing headwinds.
“There is still strong willingness among Chinese companies for overseas acquisition,” Luo Xiaojun, vice president of Morning Whistle Group, a cross-border M&A information provider, told Shanghai Daily, “However, they have been deterred by rising valuation of overseas assets and challenges in fundraising for acquisition.”
“Meanwhile, the rise of Chinese buyers is triggering increasing anti-monopoly probes and concern over national security,” Luo added.
Recently, Chinese home appliances giant Midea Group's bid for German robot maker Kuka has sparked political resistance amid fears that Germany’s lead in the cutting-edge technology would be passed to Midea if it buys Kuka.
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