More takeovers with Chinese shareholdings

Since the start of the new millennium Chinas has become more and more involved in worldwide mergers and acquisitions (M&A). Both the transaction value and the number of transactions in which Chinese companies are involved as purchasers or targets have increased. However, there are more acquisitions by foreign companies in China than vice versa. The number of Chinese companies buying companies abroad is significantly smaller. This was revealed by a study conducted by the Centre for European Economic Research (ZEW).

According to this study which was carried out in co-operation with the Bureau van Dijk Electronic Publishing, there were about 1000 takeovers by foreign companies in China with a total transaction value of 38 billion Euros in the period from 2000 to 2007. On the other hand, there were just 161 transactions with a volume of about 18 billion Euros carried out by Chinese companies abroad. This also shows that the target companies of Chinese purchasers are on average significantly bigger than the targets of foreign companies in China. An closer look also reveals that to Chinese companies mergers and acquisitions are of particular interest with regard to the raw material sector.

The more intensive involvement of Chinese companies also reflects the growing importance of China in the global economy. While China´s share of the value of global M&A transactions was still almost zero, it grew to to about 4.5% in the second half of 2004 and to 11% in the second half of 2007. China´s share in worldwide transactions amounted to 0.5% in the year 2000, increased to 4.5% in the second half of 2004 and reached about 2,5% in 2007.

Among the most important transactions was the takeover of Pingguo Aluminium Co. by the US aluminium company Alcoa in March 2004 for 1.6 billion Euros and the acquisition of the Fujian Sedrin Brewery Company by the Belgian-Brazilian brewery conglomerate InBev in June 2006 for more than half a billion Euros. On the other hand, China Petroleum & Chemical Corporation in August 2006 took over the Russian petrol conglomerate Udmurtneft for 2.7 billion Euros and the CITIC Group purchased the Kazakh natural gas producer JSC for 1.4 billion Euros in December 2006.

Information on the global market for mergers and acquisitions is available in the latest edition of the M&A report by the ZEW which can be downloaded. GERMAN