China on pace to remain active participant in US M&A

Updated: 2016-02-03 10:32

By PAUL WELITZKIN in New York(China Daily USA)

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The Chinese were eager participants in the US merger-and-acquisition market last year and will likely be active again in 2016, according to experts involved in global M&A.

Both the value and volume of China's inbound M&A in the US was higher in 2015 than in 2014, according to Record Breaker: US M&A in 2015, a report from the White & Case LLP law firm and industry news provider Mergermarket.

China was involved in 60 US M&A transactions with a value of about $18 billion. While that represented about 1 percent of the $2 trillion M&A market last year according to the report, China was the fourth most active inbound acquirer in 2015 behind Canada, the United Kingdom, and Japan.

"A lot of the (M&A) activity in the US last year including the transactions from China was due to confidence in the US market driven by an economy that continued to expand for the sixth consecutive year," John Reiss, global head of White & Case's M&A practice said in an interview on Tuesday.

Reiss also said that many buyers could obtain favorable financing, and corporate and private equity firms had amassed huge cash reserves that were available for investment.

He said China was an active buyer in many sectors of the US economy. He also noted that the Chinese feel more comfortable about making investments in the US.

"Historically the Chinese have had some trepidation about the US," Reiss said. "CFIUS (the Committee on Foreign Investment in the United States, interagency group that assesses the national security impact of foreign purchases of a US business) has been a factor in that, but now I think people understand that CFIUS is basically a fair process. Chinese companies recognize they are now welcome here."

Reiss believes that in 2016 the Chinese will remain an active participant in US M&A. "I think the Chinese are still attracted to the US market and I think we will see more deals from them this year," he added.

Already this year China's Haier Group said it would buy General Electric Co's appliance business for $5.4 billion.

Mergers and acquisitions also reached a record level in China last year, rising 37 percent year-on-year, a new report from global auditing firm PricewaterhouseCoopers showed. The report said 9,420 deals were completed during 2015, worth $733.7 billion, which marked an 84 percent increase in value.

PwC's latest figures showed that domestic strategic M&Asgrew strongly, driven by the economic transformation of the Chinese economy, sector consolidation, restructuring and inorganic growth strategies.