Insights

2013 Greater China outbound M&A spotlight

Graduating up the value chain - China's overseas revival

Chinese outbound M&A activity increased over H1 2013

Over the first six months of 2013, 98 outbound deals, worth a cumulative US$35.3bn were announced. In comparison, in the second half of 2012, only 89 deals, worth a total of US$42.7bn, were undertaken. (One of those was CNOOC's takeover of Canada's Nexen worth US$17.7bn), while the first half of 2012 saw 97 transactions worth US$22.9bn come to market.

Outbound deals are getting larger

A comparison of the size of outbound deals undertaken in H1 2012 and H1 2013 shows that outbound deal flows are getting larger. Of those deals where value is disclosed, more than half (55.6 percent) were worth less than US$100 million in H1 2012. This proportion fell to 48.1 percent over the first six months of 2013.

The main deal driver of Chinese overseas investment will be to acquire technological best practices

When asked why they thought that Chinese investors were buying overseas assets, more than 80% respondents believe that the primary objective for Chinese investors buying overseas will be to grow market share abroad, as well as secure natural resources.

..While the main obstacle to acquiring North American and European assets is differing management structures

When buying in either North America or Europe, nearly 90 percent of Chinese investors say that the primary obstacle they face is differing management cultures between the bidder and the target business. Similarly, 80 percent also say that unwilling vendors in these two regions are also a major issue to overcome. However, when it comes to transacting in Asia, the vast majority (91 percent) of potential investors think that the biggest problem is the lack of reliability of target-related information, followed by the consistency of the application of laws.

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2013 Greater China outbound M&A spotlight

The fifth edition of the Deloitte China outbound M&A spotlight comes at an increasingly hopeful time for potential Chinese overseas investors As a result, it should come as no surprise that Chinese outbound M&A investments increased over the first half of 2013 as local investors became increasingly confident about overseas prospects in the new economic normal.

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Patrick Yip

Deloitte China’s National M&A Leader