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December 16, 2009

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Outbound M&As set to climb

CHINA'S outbound mergers and acquisitions are expected to grow three times this year as domestic companies take advantage of the global financial crisis to seek expansion overseas, an industry report said yesterday.

Meanwhile, overseas strategic investors were rather quiet in the M&A market in China as they stayed on the sidelines this year.

The value of outbound M&A deals for this year is likely to hit a record of US$30 billion to US$35 billion, more than three times the value last year, PricewaterhouseCoopers said yesterday in a report.

"Chinese companies are making use of the global financial crisis to seek more expansion opportunities abroad," Andrew Li, a PwC transactions partner, said yesterday in Shanghai.

"Such a trend is expected to continue in the years to come."

The accounting firm said it expects both outbound M&A value and volume to surge 40 percent next year.

"While deals for energy and resources will continue to dominate, larger Chinese private enterprises are looking for know-how and access to foreign markets and deals in other sectors can also be expected to grow strongly," said Wang Xiaogang, a PwC transactions partner.

Inbound M&A deals in China, including Hong Kong and Macau, returned to robust levels in the second half of this year, indicating that the impact of the global economic downturn on the market was short-lived.

Deals involving foreign firms have continued to fall since 2007. Fewer than 400 deals were announced this year, an annual drop of 40 percent.

Foreign buyers may re-emerge strongly in the second quarter of next year, reflecting pent-up demand for China's strong economy, the firm said.

More than 1,800 domestic transactions are likely to be made in the second half of this year, boosting the whole year deals to 3,200.

About 2,000 deals were announced in the second half of 2008, or a total of 3,797 deals last year.

China's economy grew 8.9 percent in the third quarter of this year, after growing 7.9 percent in the three months through June and 6.1 percent in the first three months.


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