Asia-Pacific News

Chinese Acquisitions in US Near Record

Paul J Davies

Chinese acquisitions of US assets and businesses are running at record levels this year, bucking the trend of a generally tough mergers and acquisitions market and a sign that it is easier than many think for Chinese companies to attain approval for deals in America.

Beijing's Central Business District
Frederic J Brown | AFP | Getty Images

Almost $8bn of deals have been announced so far this year, led by Dalian Wanda’s $2.6bn takeover of AMC Entertainment, the US cinema chain, and Sinopec’s $2.4bn acquisition of big stakes in a number of oil and gas developments from Devon Energy .

The $7.8bn total is a record for the first eight months of any year and is approaching the full-year record of $8.9bn for Chinese deals buying into the US set in 2007, according to data from Dealogic.

Joe Gallagher, co-head of M&A in Asia at Credit Suisse, said the growth in China-US deal volumes was a natural product of the country’s development and its hunger for energy and resources.

“China is getting bigger, getting richer, getting more sophisticated. Chinese companies are developing – all of that drives growth in deal activity,” Mr. Gallagher said. “Some of China’s biggest companies, especially in the oil and gas sector, are getting much more sophisticated in their approach to acquisitions.”

Credit Suisse tops the table for advising on deals with Chinese acquirers and US targets, having been involved in $5.1bn of trades. It advised Sinopec in the Devon deal and was among the five advisers to AMC. However, Credit Suisse is third behind Goldman Sachs and Citigroup for overall China M&A.

The strength of the China-US activity comes in spite of the broader slowdown in M&A, both in China itself and globally. Total deal volume for the first half in China was down 3 per cent from a year earlier at $48.6bn, according to data from Mergermarket. Global M&A volumes for 2012 are on course to be the slowest since 2003.

These totals could be boosted significantly by the end of the year. Chinese energy group CNOOC has launched a $18bn deal for Nexen of Canada and Sinopec is considering a bid for billions of dollars of assets owned by Chesapeake Energy , the US gas producer.

Since Cnooc’s blocked attempt to take over Unocal of the US in 2005 in 2005 and the repeated knockbacks handed to Huawei, the telecoms group, in trying to do deals in the US, it had been widely assumed the country was resistant Chinese buyers.