It’s February, and China’s Already Broken the Annual Record for U.S. Deals
Chinese companies are on a U.S. shopping spree.
On Wednesday, U.S. technology distributor Ingram Micro Inc.said it hadagreed to be acquired for about $6 billion by a unit of Chinese conglomerate HNA Group. The transaction pushed the total value of Chinese-led purchases of U.S. companies to $23 billion so far in 2016–already breaking the full-year record just seven weeks into the new year, according to Dealogic.
The value of the 24 acquisitions of U.S. companies by Chinese buyers is up 15% from the previous record, set last year, when Chinese companies announced 115 deals valued at a total of $20.5 billion.
And 2015 broke the record set in 2014, when Chinese buyers spent $14 billion on U.S. acquisitions. The tally for each year includes transactions where Chinese firms took big stakes in U.S. firms, such as the 5.6% stake that Alibaba Group Holding Ltd. took in Groupon Inc. this week.
The Chinese e-commerce giant on Friday disclosed a in the once-popular, but lately shunned, daily-deals company.
Amid slowing growth in China, companies there have become more aggressive in pursuing U.S. firms. Many of the deals announced recently involve U.S. makers of computer chips that have attracted scrutiny on national-security grounds. The deal for Ingram doesn’t fit into that template. Instead of building technology, it distributes a wide range of computer products.
The tally of recent deals doesn’t include some efforts by would-be Chinese buyers that didn’t bear fruit. Some Chinese buyers have sought to come in and break up a slew of existing deals for U.S. semiconductor companies with offers of their own.
In December, a group including China Resources Microelectronics Ltd. and Hua Capital Management Co. made an unsolicited bid for Fairchild Semiconductor InternationalInc., which already had a deal with U.S. chip maker ON SemiconductorCorp.
But Fairchild rejected the Chinese proposal this week, saying it was concerned that it would fail to pass muster with U.S. authorities on national-security grounds.
The Chinese chip maker Montage Technology Group Ltd. sought to break up DiodesInc.'s planned purchased of Pericom Semiconductor Corp. Pericom rejected Montage’s offer in November, also citing potential regulatory hurdles.
U.S. regulators — specifically the U.S. Committee on Foreign Investment — have pushed back on Chinese purchases. In January, the committee blocked Royal Philips NV's planned $2.8 billion sale of most of its lighting components and automotive-lighting unit to a Chinese investor on national-security grounds.
Globally, the tally of Chinese acquisitions of overseas companies haven’t yet broken the all-time mark set last year. But Chinese buyers are already 70% of the way to the record with more than 10 months to go.
Chinese companies have struck 101 deals outside of mainland China in 2016, valued at $82 billion. The $43 billion acquisition of Swiss pesticide and seed company Syngenta AG by government-owned China National Chemical Corp. accounts for roughly half of that volume. It’s the most ambitious foreign takeover attempt by a Chinese company to date.
Last year, Chinese firms spent $112 billion on deals outside of the country’s borders.
Wall Street Journal (blog)
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