omniture

Cross-border Transactions Garner US$16.77b

Zero2IPO Research Center
2007-12-06 21:53 1464


M&As in Energy and Bio/healthcare Rise

SHANGHAI, China, Dec. 7 /Xinhua-PRNewswire/ -- The Chinese M&A market is heading to be a more active and mature market in the world, especially at a crucial time when economy is booming and more intra-sector and inter-sector M&As are transacted. Statistics of Zero2IPO Research Center -- the research arm of Zero2IPO Group -- say that as of November 30, 2007, a combined value of US$7.59 billion was disclosed in TMT, bio/healthcare and energy sectors from 72 deals with disclosed value out of the total 108 M&As closed during this period. The cross-border M&As garnered US$16.77 billion. The cross-border value disclosed in October and November accounts for 71.3% of the entire year excluding December.

A series of laws and regulations related to M&A in 2007, especially Anti-trust Law, Interim Measures for the Administration of State-owned Shareholders’ Transfer of Their Shares of Listed Companies, Administrative Measures of Assets Reorganization of Listed Companies and Catalogue for the Guidance of Foreign Investment Industries, provide sound regulatory frame for healthy development of Chinese M&A market.

The three M&A highlights in 2007 following an in-depth survey and analysis are:

Frequent mega cross-border M&As were achieved

Though 2007 subordinated debt made impact on global financial markets, it had little influence on Chinese market. The robust Chinese macro-economy growth and continuous RMB appreciation facilitated Chinese enterprises to acquire overseas counterparts. Seventy-two cross-border M&As were transacted in China till November 30, 2007. Of these, 52 deals disclosed US$16.77 billion.

Table 1: Distribution of China-based Cross-border M&As (by Quarter)

(Please refer to the link at the bottom of the page)

Figure 1: Distribution of China-based Cross-border M&As (by Quarter)

(Please refer to the link at the bottom of the page)

Among the 72 cross-border deals, the Industrial and Commercial Bank of China (ICBC) acquired a 20% stake in the Standard Bank of South Africa Limited for US$5.5 billion, creating a value record of China capital-launched M&As. Foreign acquirers were still active in China M&A market though Chinese regulatory bodies promulgated rules to restrict foreign capital-launched M&As in sensitive sectors. Arcelor Mittal acquired the stake in Hong Kong-listed China Oriental Group. This attraction woos foreign companies to invest capitals in Chinese market.

TMT deals remain active: bio/healthcare & energy deals rise

Booming TMT M&As in 2006 lasted into 2007 with 71 deals completed as of November 30. Of these, 42 deals disclosed US$2.56 billion on par with the entire 2006 both in terms of deal number and total value.

Table 2: M&A transaction value & deals (by Target)

(Please refer to the link at the bottom of the page)

Figure 2: M&A Transaction Value & Deals (by Target)

(Please refer to the link at the bottom of the page)

The M&A value and deal number in bio/healthcare and energy sectors witnessed year-on-year growth. The first 11 months of 2007 saw 17 bio/healthcare deals, seven more ones from that in entire 2006. The disclosed value was up 12.4% year-over-year. Twenty deals in energy this year excluding December garnered US$4.40 billion. The deal number and transaction value rose by eight ones and US$976 million against those in 2006.

VC/PE-related deals mostly were distributed in TMT with smaller size

Within Zero2IPO Research Center scope as of November 30, 2007, 26 VC/PE-related deals were closed with US$511.51 million disclosure. Twenty-six deals were distributed in TMT (20), Services (2), Traditional (3) and Bio/healthcare (1). Compared with last year, VC/PE-related transaction value dropped. This shows VC/PE funds preferred to choose IPO instead of M&A to exit investments.

Table 3: VC/PE-related M&As

(Please refer to the link at the bottom of the page)

Figure 3: VC/PE-related M&As

(Please refer to the link at the bottom of the page)

In terms of industry, the VC/PE-related deals as of November were mostly distributed in TMT. TMT deals account for 76.9% of the total VC/PE-related deals during this period.

The global M&A market enjoyed healthy development in H1’07 with numerous mega M&As closed. Due to subordinated debt crisis in H2, the international capital liquidity was not sufficient like before, hindering the financing channel through M&A. The global M&As in H2 were not as active as in H1.

But the Chinese economy maintained robust growth supported by the double surplus and continuous RMB appreciation. In this encouraging situation, China capital-launched M&As were frequently transacted in a broader sector coverage. We deem this trend lasts into the foreseeable future.

The Chinese M&A market will be more market-oriented with updated M&A laws and regulations enacted, which will exert positive effects on China macro-economy and capital market. The VC/PE funds active in China market will facilitate China M&A market. The sustained development of Chinese M&A market will last in 2008 based on its development potential.

Note: The research scope of Zero2IPO Research Center covers:

a. At least one party involved in the deal is a Mainland-based company.

Here “party” refers to either a target company or an acquirer

b. Deals where acquirers take 20% and above of the target companies’

stake

For more information, please click:

http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=5421

About Zero2IPO Research Center

Established in Nov. 2001, Zero2IPO Research Center aims to provide professional research reports and custom researches for relevant professionals in the Greater China Region. Our research ranges from venture capital, private equity, IPO, M&A to TMT industries. Currently, Zero2IPO Research Center has become the most prestigious research institute in China VC and PE field.

In addition, the Research Center launched the first online database in China -- Zero2IPO-China VentureDatabase in December 2007, collecting the latest, in-depth and all-around data, covering China VC, PE, M&A, and IPO fields to satisfy the needs of the profession.

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Source: Zero2IPO Research Center
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