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CURRENT SITUATION OF CROSS-BORDER M&A IN CHINA

Time:2014-03-13 Hit:1169

CURRENT SITUATION OF CROSS-BORDER M&A IN CHINA

With the rapid development of China’s economy, the constant optimization of industrial structure and the appearance of some new consumption demands such as automobiles, telecommunication, travelling, housing and so on, China has become a highlight at the global M&A market. In the recent years, the Mergers & Acquisition by foreign capital has stepped into a brand-new development platform and has displayed the following characteristics: one after another record of the transaction scale of Mergers & Acquisition by foreign capital has been created; Mergers & Acquisition mainly happens in banking, manufacturing and Internet industries; the Mergers & Acquisition pattern has been renewed over and again; overseas buy-out funds have opened China’s door .
A. Constantly Expanded Mergers & Acquisition Scale
Recently, quite a few Mergers & Acquisition transactions involving a large sum of money have taken place in China’s market, setting one record after another in both the sum of money and the number of transactions. For instance, in June 2005, U.S. Bank first invested $ 2.5 billion in buying 9% of China Construction Bank’s shares held by China Huijin Investment Corporation Ltd. and then subscribed for $ 0.5 billion’s shares at CCB’s overseas IPO. This has got the largest sum of single investment of foreign corporations in China’s inland banks so far and has broken the record of $ 1.747 billion set by Hong Kong and Shanghai Banking Corporation when buying the shares of Communications Bank of China. In addition, Yahoo also set the largest sum on Internet when buying Alibaba.com. China has become a focus attracting various kinds of industrial capital and financial capital all around the world.
B. Focusing on Banking Industry
In terms of industry, Mergers & Acquisition mainly takes place in the industries related to banking, manufacturing and Internet, in which banking industry has become a focus. For example, Temasek invested $ 3 billion in the shares of Bank of China; Pangaea Capital Manage bought 6.88% of Huaxia Bank’s shares with 1 billion Yuan; ING Group in Holland invested € 0.196 billion in 19.9% of Beijing Bank’s shares. In addition, most of Mergers & Acquisition transactions are conducted in the leading enterprises of different industries.
C. Constantly Renewed Mergers & Acquisition Patterns
There are mainly four Mergers & Acquisition patterns including rescue Mergers & Acquisition, cooperative Mergers & Acquisition, scrambling Mergers & Acquisition and hostile Mergers & Acquisition. With all the four patterns existing in China now, we should welcome the former two patterns while be on alert for the latter two.
D. Investment of Foreign Funds
China has become a hot spot for buy-out funds [7]. In May 2004, Shenzhen Development Bank announced that they had sold 17.89% of its shares to foreign funds at the price of 1.253 billion Yuan. In July 2005, Harbin Pharmaceutical Group was changed into a corporation Ltd controlled by the state from a former state-owned one. 34.76% of its shares flew from the state to the legal person. This is the first merger transaction in which a Chinese large-scale state-owned enterprise was bought by global buy-out funds. In addition, Carlyle Funds bought Xuzhou Construction Machinery Group in October 2006. various kinds of industrial capital and financial capital all around the world.
B. Focusing on Banking Industry
In terms of industry, Mergers & Acquisition mainly takes place in the industries related to banking, manufacturing and Internet, in which banking industry has become a focus. For example, Temasek invested $ 3 billion in the shares of Bank of China; Pangaea Capital Manage bought 6.88% of Huaxia Bank’s shares with 1 billion Yuan; ING Group in Holland invested € 0.196 billion in 19.9% of Beijing Bank’s shares. In addition, most of Mergers & Acquisition transactions are conducted in the leading enterprises of different industries.
C. Constantly Renewed Mergers & Acquisition Patterns
There are mainly four Mergers & Acquisition patterns including rescue Mergers & Acquisition, cooperative Mergers & Acquisition, scrambling Mergers & Acquisition and hostile Mergers & Acquisition. With all the four patterns existing in China now, we should welcome the former two patterns while be on alert for the latter two.
D. Investment of Foreign Funds
China has become a hot spot for buy-out funds [7]. In May 2004, Shenzhen Development Bank announced that they had sold 17.89% of its shares to foreign funds at the price of 1.253 billion Yuan. In July 2005, Harbin Pharmaceutical Group was changed into a corporation Ltd controlled by the state from a former state-owned one. 34.76% of its shares flew from the state to the legal person. This is the first merger transaction in which a Chinese large-scale state-owned enterprise was bought by global buy-out funds. In addition, Carlyle Funds bought Xuzhou Construction Machinery Group in October 2006.


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