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Overseas M&A deals increase

CHINESE merger and acquisition deals overseas picked up this year after government stimulus plans and the trend is expected to continue next year, an industry report said today.

The value of quarterly merger and acquisition deals expanded from US$1.3 billion in the first quarter of this year to US$8.9 billion in the third quarter, Deloitte said in a report today.

There were 26 such deals in the third quarter from 10 in the first quarter, the accounting firm said.

"The Chinese economy has remained somewhat insulated to the fallout from the financial crisis. This has contributed to the relative robustness of outbound M&A activity from China," said Lawrence Chia, head of Deloitte China M&A services and global Chinese services group co-chairman.

"The desire of Chinese companies to expand by acquisitions and support from the Chinese government are also driving outbound deals," Chia added.

There were 61 Chinese outbound acquisitions with an aggregate value of US$21.2 billion in the first three quarters of this year.

Transactions in the energy, mining and utilities sectors continue to dominate Chinese M&A purchases abroad.

Since 2003, acquisitions in the sectors have accounted for 29 percent of the total outbound deal flow by volume and a massive 65 percent of the total deal valuations.

"Looking forward, the dominance of these transactions is likely to continue into 2010," said Karl Baker, mining sector M&A partner for Deloitte China. "Chinese demand for raw commodities has continued to grow throughout the credit crisis."


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