Tuesday 25 July 2017

Chinese overseas M&A deals are down this year, and will only fall further

Chinese outbound M&A has taken a slight dive during H1 of 2017, as Beijing imposes capital controls introduced last December that make it difficult to move money out of the country. While signs of a resurgence emerged in May and June, recent government actions - including calling businesses hungry for overseas deals a 'systemic risk' (paywall) - suggest the deal volume will resume slowing in H2. Data from research firm Rhodium Group shows that #Chinesecompanies announced 92 outbound M&A deals between January and June. That’s down from 113 in the same period in 2016, marking an 18.6% decrease.


A surge in cross-border deals throughout 2016 amounted to $140bn, causing Beijing in December to release the new rules making it difficult for large companies to complete such acquisitions. Since then, several high-profile deals have fallen through, including 2 involving California companies: Real estate developer Wanda Group attempted to buy Dick Clark Entertainment, and hardware maker LeEco’s tried to buy TV seller Vizio (paywall). And Wu Xiaohui, chairman of the deal-hungry insurer Anbang, was detained by Chinese authorities in Hong Kong a few weeks ago.
 

Chinese overseas M&A deals are down this year, and will only fall further

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