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BIZCHINA / Center
Domestic M&As up sharply in 1st half
By Hu Yuanyuan (China Daily)
Updated: 2007-07-18 09:55
The number of China's domestic mergers and acquisitions (M&As) jumped in
the first half of the year as funds raised in buoyant equity markets were
put to use to consolidate fragmented industries, analysts said yesterday.
Domestic deal volumes grew from 317 in the first six months of 2006 to
454 in the first half of 2007, according to data by the industry journal
M&A Asia.
"With all the attention on China's overseas acquisitions, it is often
forgotten that many Chinese companies have attractive and immediate
acquisition opportunities at home at the moment," said Gabriel Wong, a
corporate finance partner of PricewaterhouseCoopers (PwC), an
international accounting firm.
M&A Asia statistics also show that combined incoming and domestic deals
in China increased by 20 percent to 808 in the first six months of 2007.
Total value of the disclosed deals in the first six months fell slightly,
however, to $27.6 billion compared to $29.4 billion last year.
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"Deal value is particularly difficult to interpret because there are many
large one-off transactions, such as sales of assets by State-owned groups
to listed parents and backdoor listings," said Zhao Liang, director of
PwC's transactions strategy team.
Industries that have seen high volumes of deal activity include sectors
that have been restructured from full State ownership, such as energy,
steel and cement, according to PwC.
"In newer, deregulated sectors, M&A activity is also strong, but is
driven by market imperatives," said Wong, citing the retail sector as an
example, where national chains are forming from regional and city-based
businesses.
The volume of announced overseas acquisitions increased by 72 percent, to
31 from 18 in the first half of last year. But with no acquisitions
larger than $1 billion in 2007 - two oil deals of $5.9 billion were
announced in the same period of 2006 - the value of outbound deals
decreased by 64 percent.
(For more biz stories, please visit Industry Updates)
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