Top 10 Chinese Buyers of Cross-border M&A in 2016

Over the past year in 2016, more and more Chinese capital joined overseas mergers and acquisitions. Overall, cross-border M&As of Chinese enterprises move toward a faster pace and larger companies. Last year, Chinese enterprises and capital announced cross-border investment M&A transactions totaled more than 220 billion US dollars. DealGlobe observed the emergence of large-scale transactions in the market, as well as the transaction structure being more complex and difficult. On the other hand, many companies’ investment strategy and purpose become clearer through pre-trial and accumulated experience.

Here, DealGlobe selected some most representative Chinese buyers in 2016. Not only because these buyers are actively trading, but also because their trading methods and strategies are references for other Chinese enterprises.

1) The richest buyer - China National Chemical Corporation purchased G-tech Optoelectronics Copr. for 43 billion US dollars!

Evaluation: China's chemical industry in the field of mergers and acquisitions in 2016, the absolute standard.

On February 3rd, China National Chemical Corporation announced it would buy Swiss agrochemical giant Syngenta for $46.5 billion, valued at more than $ 43 billion. The merger, if completed, would rewrite the pattern of global agrochemical industry, and therefore attracted global attention. In 2015, China National Chemical Corporation just bought Italian tire company Pirelli with for 7.1 billion euros. This new merger would most likely be winning.

Because of the complexity and sensitivity of the deal, it still needs to be approved by the relevant EU regulatory authorities, and the approval period has been repeatedly extended. Overall, however, the probability of the transaction passing and its successful delivery is still high. Looking at the transaction amount, this is undoubtedly the year of pride of a cross-border M&A transactions on Chinese enterprises history. It is also unlikely that in the near future, anyone will surpass this achievement.

2) The most active buyer - HNA Group covers a wide range of fields in global network

Evaluation: If Hainan Airlines is not the first, no one dared to call them second.

In January 2016, HNA's Bohai Leasing completed the acquisition of Irish aircraft leasing and rental management services company Avolon, becoming one of the core brands of the world's fourth largest aircraft leasing group. In October 2016, HNA used Avolon to acquire the aircraft leasing business of the US rival CIT Group for about $ 10 billion. This acquisition will double the size of Avolon, pushing it up to the top three in the industry.

In addition, in 2016, Hainan Airlines also won the British foreign exchange operator ICE, Carlson Hotel Group, Singapore’s integrated logistics and supply chain company CWT, Hilton Hotel Group, a 25% stake in overseas and a number of golf courses, commercial real estate. Looking at the frequency of the transaction, Hainan Airlines is undoubtedly the most active buyer in China, and we don’t see anyone who is behind on a global scale. Through a series of mergers and acquisitions in recent years, Hainan Airlines is no longer just an airline company. It has became a multi-field business group. The company has also jumped to 353 on Fortune 500 companies, and is making big strides toward the top 100.

3) The most dedicated buyer - Wanda acquisition of European and American film and television companies, buying the right to speak in the film industry

Evaluation: this year, Wanda mergers and acquisitions are focused on the field of film industry, and we can see the layout of the Empire's strategic planning.

On January 12 2016, Wanda Group announced that it bought 100% stake of U.S. Legendary Pictures with not more than 3.5 billion US dollars. On March 3rd, Wanda's AMC Entertainment announced its acquisition of $ 1.1 billion U.S. Carmike Cinemas. On July 12, AMC Entertainment bought Europe's largest cinema Odeon & UCI cinema for 921 million pounds (about 80.94 billion RMB). On November 4, Wanda Group announced the successful acquisition of US Hollywood TV production company Dick Clark Productions with $ 1 billion. On December 2nd, Wanda Group’s official WeChat account announced that the Group's US acquisition of Odeon & UCI theaters was approved by the European Union. Wanda Group has basically completed the layout of the global cinema line in North America, Europe and China, the world's three major film markets. Wanda occupied the leading position in the film market and has become the absolute advantage of the world's largest cinema operators in the world film industry. Through this series of acquisitions, Wanda’s culture, film and television industry have become the industry's most eye-catching element.

4)The most twists and turns acquisition - KUKA

Comments: tough old "husband" finally nodded

On May 18th this year, Midea Group announced that it offered to buy German robot company KUKA for less than 29.2 billion. During the offer period and the additional offer period from June 16 to August 4, the offer was supported by the majority of Kuka shareholders, and when the transaction would be complete, the Media Group would hold 94.55% of KUKA.

Although Midea Group originally expected the minimum shareholding ratio of more than 30% (including MECCA’s 13.51% share), and emphasized that this acquisition is not taking advantage of Kuka while its delisted. However, when the acquisition plan had just been raised, the message of the Media Group purchasing Kucha Group quickly spread out to the German market. The German Minister of the Economy, including some officials, called for other buyers in Europe to participate in hindering Media Group’s acquisition. The media in Europe as a whole were not very fond of this move.

However, on June 15, when the German Federal Financial Supervisory Authority audit through the acquisition of documents, rumors were gradually ruled out. By October 13, the transaction has been adopted by China, the United States, Russia, Brazil, Mexico, the European Union and other regions of the antitrust review conditions. However, the final procedure was stuck in a review from the US Foreign Investment Commission (CFIUS) and the Defense Trade Control Council (DDTC). Fortunately, after the adjustment and a lot efforts, the United States finally agreed to Kuka "marrying" Media Group - who achieved its goal.

The deal went through multiple obstructions and finally passed. In the face of difficulties, the Media Group went to government, regulators, shareholders and public opinion and showed the skills of communication art which is undoubtedly worthy of Chinese enterprises to learn.

5) Tencent wins from the Softbank Group and took over the game giant Supercell

Evaluation: In the game of mergers and acquisitions, Tecent is smart about taking the right shot at the right moment.

On June 16, Tencent announced its takeover of Softbank Group’s Supercell with all shares in for a total amount of about 8.6 billion US dollars, which broke the record of Activision Blizzard Closing Its $5.9B Acquisition Of King in the gaming industry. In this gamble, Tencent won more than 100 million mobile game users and top-level research and development. Supercell, the world's top mobile game development company, also welcomed his new patron. With the largest acquisition of Tencent’s history, Tencent also became a global gaming giant from Chinese internet company perspective. If Softbank Group wasn’t in debt crisis, Tencent wouldn’t have become Supercell's new lover so smoothly.

6) The most perseverant buyer - Haier's perseverance for the acquisition of General Electric, an American multinational conglomerate corporation

Evaluation: It seems that the spirit of perseverance and good reputation really touched the "girl's" heart.

On June 7, Haier took over United States’ landmark enterprise General Electric's appliance business with 55.8 billion dollar and then expanded the international territory. This is the largest M&A transaction in home appliance industry. Haier's acquisition drives the Haier Group to international stage and better promotes the transformation, which was a long eight-year "pursuit."

As early as 2008, General Electric offered the sale of its home appliances business for the first time, and Haier participated in the bidding, but Haier didn’t get the business. In 2014, General Electric again tried to sell home appliance business, and eventually agreed to sell to Haier in 2016 after two years of negotiation. According to media reports, General Electric executives heard that the Australian home appliance business Fisher & Paykel performed very well after the acquisition by Haier Group. Even though it is not the highest offer, Haier still successfully acquired the General Electric, and it seems that the spirit of perseverance and good reputation really worked.

7) State-owned power grid 12 billion acquisition of Brazilian power company shares

Evaluation: State Grid Corporation of China is indeed an activist in policy call.

With the successful establishment of Asian Development Bank and the deepening of the national strategy, Chinese enterprises have made great strides in the global market, especially in the developing countries. They have participated in and invested in local infrastructure projects. During the past year, many Chinese enterprises paved the road for a new direction.

On July 1st 2016, Brazilian Energia SA CPFL said the world's largest power transmission enterprises, China's National Grid would spend 5.85 billion reais (about 12 billion RMB) to acquire CPFL’s equity from Brazil's Camargo Correa SA. Reuters reported on July 1st that China’s National Grid would pay 25 RMB per share stock (about 51 RMB) of the price. Camargo Correa SA holds a 23.6% stake in CPFL, and the market value is about 1.5 billion US dollars (about 10 billion RMB). State Grid as a central enterprises, is the first, to act and implement national strategy.

8) The most friendly buyer - the giant network to buy Israel Playtime, Shi Yuzhu and friends.

Evaluation: Having so many influential friends supporting in the backstage, will Shi Yuzhu succeed?

On October 20, Giant Interactive Group Inc. announced that it will issue shares and payment of cash from the consortium to acquire the core business for the social chess online games from Israeli company Playtika. After this acquisition, Shi Yuzhu, the founder & president of Giant Interactive Group Inc. quickly grew to 5 billion RMB. After the completion of the acquisition, it is expected that Giant Interactive Group Inc. will have have net worth more than 3 billion RMB in 2017. Announcement shows that the Giant Interactive Group Inc. intends to buy per share with 43.66 RMB in order to raise 5 billion RMB of matching funds, and the funds raised will be used to pay the transaction with cash. Giant investment Fund is owned by Shi Yuzhu's company, holding 50 billion worth of shares with 43.66 RMB per share price higher than the price of 13 other transactions, 39.34 RMB, locking period of 36 months, showing its long-term business development.

The luxury consortium is particularly noteworthy. The consortium is gathered behind the bigwigs, covering Liu Chuanzhi, Lu Zhijiang, Jiang Zhaoye, Lin Rongqiang and others, who are Shi Yuzhu’s old friends in Taishan. There are Yu Feng (the founder of Yunfeng Fund), Wu Shangzhi (founder of CDH Fund), Fu Jun (Board Chairman of MACRO-LINK International Holdings Limited.) and other influential businessmen. In addition, there are state-owned institutions from Yunnan, Anhui, Zhejiang and other states. The deal has been a concern for regulators; however, we will follow up on this cross-border acquisition hoping it will be successful.

9) Anbang prefers real estate, insurance and banking

Evaluation: Anbang goes where the money flows.

In April 2016, Anbang Insurance Group announced that it will buy Korea Allianz Insurance Company for 3 million US dollars. In June 2016, China Ampang Insurance Group has stated its intention to acquire about 10% of the equity from Woori Bank (approximately US $297 million). This year, Anbang continued cross-border mergers and acquisitions in Europe and the United States. Every shot from Anbang always causes a huge response. As a result, the media gave it a variety of labels: dark horse, barbarians, fake rich, etc. From Anbang overseas M&A path, we can see that Anbang has more investment in real estate, insurance, and banking. Ever since its first overseas acquisition of Waldorf, it started taking the overseas investment path fairly quickly, with rapid accumulation of funds and channels. At the same time, Anbang is also stepping up its pace to prepare for the landing of the capital market.

In the second half of 2016, Anbang insurance had a market disruption and slowed down the pace of mergers and acquisitions. At the end of March, Anbang withdrew from the Starwood Group’s offer. We still don’t know the real reason, but in any case, Anbang is still an important force among Chinese buyers in 2016.

10) The most unique vision - Fosun looks away from the developed countries to emerging markets

Evaluation: As the old players in M&A community, Fosun has begun to focus on emerging markets. It definitely has a unique vision.

Fosun Group is undoubtedly a pioneer in the upsurge of overseas acquisitions of Chinese enterprises. In 2016, Fosun's slowed down its pace of mergers and acquisitions in the market, but did not fully stop. This may reflect Fosun’s more careful management of the mergers and acquisitions strategy.

In July 2016, Fosun Pharma became India's leading manufacturer buying pharmaceutical manufacturer Gland Pharma with up to 12.6 billion acquisition, which is the largest overseas mergers and acquisitions among China's pharmaceutical companies. Fosun said that it will use Gland Pharma in Europe and the United States and other 36 global market for product development. Utilizing its low-cost high-quality manufacturing capabilities, Fosun's biomedical innovation capabilities, and the Indian market-specific generics policy advantages, Fosun Pharma hopes to promote pharmaceutical manufacturing business, to speed up the process of internationalization and to enhance its mainstream market in Europe and the United States.

In July 2016, Fosun Group also acquired Brazil's second-largest independent asset management company RioBravo Investment Group. Followed by Fosun’s acquisition of IDERACapital in Japan in 2014, ResolutionProperty acquisition in the UK in 2015, and the set-up in Russia of Fosun Eurasian capital in 2015, Fosun will be further strengthening regional investment and aims at expanding its business in Latin America.

On the other hand, in the second half of 2016, Fosun also sold some of its overseas assets. In fact, buying and selling in a mature market are common trading practices, which will most likely be the norm for many Chinese buyers in the future.

To Sum Up

In 2016, Chinese enterprises had a magnificent year of cross-border mergers and acquisitions. Here, we have sorted out top 20 major transactions this year.

Looking ahead to 2017, we believe that there will be more new faces to join the ranks of overseas mergers and acquisitions, and Chinese buyers will use more innovative tools to show more innovative thinking. After all, Chinese enterprises’ internationalization has just begun.

This year, we have also helped more customers to complete successful cross-border M & A transactions. It is worth mentioning that our DealGlobe capital team successfully helped Storm Group and Everbright Capital established by the Shanghai Baptist Xin Investment Fund to complete the acquisition of European sports news copyright giant, MP & Silva. In this transaction, EasyBeam provided a range of services including project introduction, valuation analysis, negotiation quotation, legal consultant recommendation and post-investment management strategy formulation for Chinese buyer's clients in this transaction. DealGlobe also beat Deloitte, JP Morgan, Rothschild and other well-known overseas investment banks as British TMT Finance named DealGlobe the Media Industry of the year.

In 2017, we would like to invest more and sail further!

Original article here