French assets attract Chinese attention

Updated: 2015-01-13 08:08


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The proposed $1.3 billion takeover of Club Mediterranee SA by billionaire Guo Guangchang and investors in December marked the busiest year for takeovers of French companies by Chinese suitors to date.

The offer for the Paris-based resort operator lifted the tally of Chinese companies buying French targets in 2014 to 13 separate deals worth a total of $4 billion-both measures at the highest level in at least a decade, according to data compiled by Bloomberg.

The takeover also marks the largest amount paid by a Chinese suitor to take control of a French company in that period.

Fosun International Ltd edged out Italian billionaire Andrea Bonomi in a protracted battle for the luxury vacation organizer, completing what had become the longest takeover battle for a French asset. Fosun has used its funds from insurance policy sales to branch out into fashion, property and filmmaking, in part emulating a strategy by US investor Warren Buffett, according to Chief Executive Officer Liang Xinjun.

France's struggle to emerge from recession may also mean targets there promise better value than in other regions.

"Chinese companies are seeing opportunities to invest in France, where there are good assets at a lower price due to the crisis," said Ying Zhang, associate dean for China Business and Relations at Rotterdam School of Management, Erasmus University, Rotterdam, the Netherlands.

"Germany and the United Kingdom still remain the most preferred markets for Chinese companies, but France is catching up quickly."

Unemployment in France in the third quarter of 2014 was 10.4 percent, its highest rate in 16 years, while industrial production declined for a second month in November. Chinese deals announced in Germany last year stood at 32, more than twice the number in France, and at 40 for targets in the UK, the data show.

Fosun, which also owns European fashion labels, New York's One Chase Manhattan Plaza and backs the Studio 8 filmmaker, announced 11 acquisitions last year for $23.1 billion, according to data compiled by Bloomberg, four of which have been completed.

The Chinese group last year agreed to buy US property-casualty insurer Meadowbrook Insurance Group Inc for $433 million, an 80 percent stake in the insurance unit of Portugal's Caixa Geral de Depositos SA for about 1 billion euros ($1.2 billion), and 20 percent of specialty commercial insurer Ironshore Inc for about $460 million.