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April 12, 2017

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M&As slow in Q1, not likely to tap records

MERGER and acquisition activity in the Chinese mainland and Hong Kong slowed in the first quarter of 2017, failing to match records in 2015 and 2016, according to a Mergermarket report yesterday.

Domestic M&A deals dropped 18.5 percent to US$67 billion in the first three months of the year, compared with US$82.2 billion in the same quarter of 2016. This was the weakest quarter since the first quarter of 2014, the report said.

Inbound interest also slowed to its lowest quarter in over a decade, with 23 announced deals worth US$3.2 billion.

Outbound M&As slumped to US$25.5 billion from US$84.2 billion a year earlier, as Chinese regulators have tightened approval amid concern about yuan depreciation and capital outflow. This year is unlikely to replicate the extraordinary years of 2015 and 2016 for outbound M&As, the report said.

However, Hong Kong’s outbound M&A activities reached their highest level since 2001, with US$15.5 billion over 23 deals, as the offshore financial center is less influenced by mainland regulators. Two big deals in Australian assets — led by Cheung Kong Infrastructure and Chow Tai Fook Enterprises — accounted for 83 percent of total outbound value in the quarter.

Technology, which has been the top sector for the past two years, fell 42 percent by value to US$11.2 billion across 52 deals.

The industrial and chemical sector saw deal value shed 0.8 percent to US$16.7 billion in the quarter, while deal number fell by nine to 89.


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