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China Breaks Record For Foreign Acquisitions

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China has been the only major mover in an otherwise calm period for foreign acquisitions.

The Chinese pursuit of acquisitions has caught the attention of analysts around the world, especially as the pace of deal making has generally been slow. Now China has already broken the record for the value of overseas deals in one year, and we are only in May, writes Stephen Grocer for The Wall Street Journal.

Record breaking period for Foreign acquisitions by Chinese firms

According to Dealogic, Chinese firms have reached deals worth $110.8 billion so far this year. That is already a full-year record, beating the total of $106.8 billion for the whole of 2015.

It is also a notable number because it’s over three times the year-to-date total recorded in 2014, which was the previous high up to this stage of the year. The figures mean that China is ranked number one in the list of cross-border acquirers, according to Dealogic.

If it finishes the year in first place, it would be the first time that China has come in top. It would mean that China beats out the U.S. for the first time since 2007.

The record numbers have been driven by a number of huge deals. Chinese companies have made 17 deals worth $1 billion or more so far this year. One example is China National Chemical Corp.’s $43 billion cash offer for Syngenta, a Swiss pesticide and seed company.  But that is not the only deal. Anbang dropped a massive bid for Starwood Hotels after reports that Chinese regulators disapproved of Anbang accumulating such a large chunk of offshore assets, which allowed Marriott to swoop in.

Additionally, Reuters notes:

Affymetrix Inc rejected an offer by some of its former executives that was financed by a Chinese investment firm, even though they offered more money than an existing deal with Thermo Fisher Scientific Inc, on the basis of financing and regulatory risks.


Foreign acquisitions – China beats U.S. out of top spot so far in 2016

Acquisitions of U.S. companies make up $31.3 billion of the Chinese total, which is the highest annual total on record. That number was just $3.9 billion for the same period last year.

The pace of deal making shows no signs of slowing down in the second half of the year. According to Reuters, Chinese regulators may soon end a requirement that large outbound acquisitions must have regulatory approval. It also seems likely that they will allow Chinese companies to bid for the same target. That will help drive more deals.

However there have been some notable failures from Chinese firms. The failure rate has increased, which can only be expected as Chinese companies make more moves on the global M&A markets.

In 2016 Chinese companies have withdrawn 15 offers worth a total of $24 billion, says Dealogic. This exceeds the previous record of $22 billion, which was set in 2005.

The Chinese are coming, your move Donald Trump.

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Brendan Byrne

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