China's M&A activity dips
2012-07-12 17:48:33
China's mergers and acquisitions (M&A) activity has slowed down from last year, showing that China is not impregnable to global market conditions.
Deal volumes secured in Greater China slipped to 71 in the first half of 2012, from 121 a year ago, according to global law firm Allen & Overy's latest M&A Index.
This was despite China's strong currency and seemingly attractive market conditions. The availability of targets at reduced prices in Europe has also not led to a material growth in Chinese outbound M&A.
The total value of deals however, remained relatively unchanged despite the lower number of deals secured.
This was attributed to several large and significant transactions such as Alibaba's agreement to buy back half of Yahoo's 40-per-cent stake for US$7.1 billion, Telefonica's US$1.4 billion sale of under half its stake in China Unicom, as well as Bright Food's acquisition of a 60-per-cent stake in Weetabix.
Values for the deals made in the first half of 2012 was US$51.2 billion compared to US$52.2 billion in the same period last year.
Gary McLean, Allen & Overy's head of Corporate in Asia Pacific said: "Just like other markets, China's increasingly sophisticated M&A market is vulnerable to global economic swings. Despite strong fundamentals, there remains significant investor caution in both inbound and outbound M&A across Greater China."
Greater China is currently the world's fourth largest outbound acquirer, with 24 transactions valued at almost US$20.28 billion.
USA, Japan and the United Kingdom are the top three outbound acquirers.
Globally, M&A activity has dropped significantly in terms of volume and value.
For the first half of 2012, M&A volumes slumped 30 per cent globally to while M&A values decreased 33 per cent on-year.