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October 21, 2016

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Private firms lead overseas M&As

PRIVATELY owned companies drove the Chinese mainland’s overseas mergers and acquisitions in the first three quarters of this year, surpassing state-owned enterprises for the first time by deal value and number, according to a PricewaterhouseCoopers report released yesterday.

Private companies sealed 449 M&A deals between January and September, nearly five times the number for SOEs, PwC said in its quarterly report.

Deals concluded by private companies were worth US$80.9 billion, accounting for 51 percent of the total and for the first time exceeding the US$56.5 billion sealed by the SOEs.

Private companies have been more inclined to look for advanced technologies, management experience, talents, brands, services and overseas market shares when they acquired firms in the media, entertainment, manufacturing, branded consumer products and supply chain sectors, according to the report.

SOEs prefer traditional resource projects such as energy and minerals as well as technologies and intellectual property rights in the agriculture, health care and environmental protection sectors.

Overall, the value of outbound M&As by Chinese mainland companies hit a record high of US$164.3 billion in the first three quarters, exceeding the combined value of 2014 and 2015.

Even as capital flows are tightening, PwC remained optimistic about the outlook for overseas buying by Chinese companies.

“We expect the overall growth trend of Chinese companies’ merger and acquisition activities to continue in the short and long term,” said Tang Xun, transaction service partner at PwC China.


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