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China's M&A deals tipped to rebound in 2013

By Cai Xiao  (China Daily)

10:44, January 31, 2013

Domestic and foreign-inbound mergers and acquisitions deals by strategic investors fell to a five-year low last year, but activity will rebound in 2013, international accounting firm PricewaterhouseCoopers said.

Last year, 2,953 M&A deals were made by domestic and foreign strategic buyers in China and their value totaled $97.1 billion, down 28 percent year-on-year, according to a report released by PwC on Wednesday.

Overall, there were 4,115 M&A deals related to the Chinese market totaling $199.5 billion, down 9 percent year-on-year.

In addition to strategic M&A deals, the value of deals by financial buyers - private equity and venture capital firms - also declined, but only outbound deals showed growth.

"Global economic uncertainty and the soft landing of the Chinese economy may be the main reasons behind the five-year low," Leon Qian, PwC Northern China transaction services leader, told China Daily.

Qian added that domestic and foreign-inbound strategic M&A activity was even worse than the activity seen after the global financial crisis because the Chinese government launched a 4 trillion yuan ($605 billion) stimulus package in November 2008.

"As the direction of the Chinese economy becomes clearer, industry consolidation accelerates, domestic leadership changes take effect, and foreign economies start to emerge from their stressed positions, this should result in a strong rebound in China domestic and foreign-inbound strategic deals in 2013," said Qian.

According to the report, Japan remained the most active foreign-inbound M&A investor in China in 2012 for the second consecutive year, but the number of deals involving Japanese investors declined 30 percent year-on-year, mainly because of the Diaoyu Islands issue. The biggest deals in 2012 still came from the United States and Europe.

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