Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: cpt :: articles on VAT and GST in India :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: form 3cd :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit
 
 
« Mergers and Acquisitions »
 What is Triggering the Wave of Mergers & Acquisitions in the Indian Internet Space?
 Oil and gas mergers and acquisitions are finally making a comeback
  Mergers: Commission approves acquisition of St Jude Medical by Abbott Laboratories, subject to conditions
 Mergers and Acquisitions: What’s Happening in the OFS Industry?
 Mergers: Commission approves acquisition of St Jude Medical by Abbott Laboratories, subject to conditions
 Prediction: These 8 Companies Will Get Bought in 2017
 Third Quarter Results Show Continued Strength in Mergers and Acquisitions
 Mergers and Acquisitions Modelling 3 Day Course - 23.03.17 - Research and Markets
 Foiled cross-border mergers and acquisitions
 Mergers and Acquisitions: 15 Important Considerations for In-House Counsel
 U.S. mergers and acquisitions activity expected to remain steady in 2017: KPMG

Mergers and acquisitions expanding across the nation's technology sector
September, 04th 2014

This year has witnessed a sharp rise in M&A activities in China's technology sector.

Data from Dealogic, a global market observer, show that acquisitions led by Chinese technology firms reached $25.6 billion by last Tuesday, compared with $9.3 billion during the same period last year, and $17.66 billion for 2013. Year-to-date deal volume reached a record high of 275 deals, compared with 218 for 2013.

While overall Chinese acquisitions have reached a record $162.5 billion so far this year, up 27 percent year-on-year, the technology sector saw 175.72 percent growth in value, making it the third most active sector in M&A activities after resource and finance. The deal value of outbound technology M&A surged 175.77 percent year-to-date.

The main reasons behind the increase are rising demand for new technology and people of know-how in China, said Kelly Gregory, partner at Clifford Chance Shanghai, who advised Dongfeng Motor Group's 1.6 billion euro ($2.1 billion) acquisition of a strategic stake in PSA Peugeot Citroen, Europe's second-largest carmaker, in February.

"Competition is intense across all segments in the technology market, particularly among the online players. They are under a lot of pressure to have the latest technologies," she said.

Acquisitions make sure big companies "stay ahead of the curve", she said.

Increasingly, Chinese enterprises are looking outside the country for more choices.

"In the past several years, Chinese companies have outgrown US comparables by market cap. As they scale out and domestic competition heats up, going outbound is certainly the way they are going for technology, products and access to new markets," said Winston Cheng, head of Asia TMT investment banking at Bank of America Merrill Lynch, who assisted IBM selling its server business to Lenovo Group in February.

"Some also go abroad following their clients' footprints. They need to have presence where their clients are." He said that US players used to feel they were the best bids for global assets. "But now they are starting to worry that the Chinese are becoming equally strong. Today people are increasingly looking at taking Chinese money and then getting a unique business model or access to the China marketplace."

Regulatory change is certainly in favor of the supply-demand dynamic. A set of new rules issued by the National Development and Reform Commission, including the Administrative Measures on Approval and Filing of Outbound Investment Projects, took effect this May.

According to the new policies, other than investments in sensitive countries and industries, outbound investments of less than $1 billion no longer require government approval. Instead, only a filing with NDRC or its provincial branches is required.

"With the new approach, uncertainty and the time required for NDRC approval are expected to be significantly reduced, especially for deals under $1 billion," said Gregory, adding that most of the outbound investment deals by Chinese enterprises fall into this category.

"In several outbound investment deals we have been working on, the Chinese investors, by taking advantage of the new measures, were able to compromise in this respect in exchange for concessions from the sellers in other respects."

Chinese technological companies also have been eyeing alliances within the sector. In April, Alibaba Group Holding Ltd announced its plan to acquire an 18.5 percent stake of Youku Tudou Inc, the Chinese version of YouTube. At the end of May, the e-commerce company also snapped up a share of Singapore Post Ltd.

"The current wave of M&A activities could potentially encourage strategic business alliances among Chinese technological players to emerge. Chinese companies are also riding this wave to transform themselves over time from domestic leaders to global champions," said Christopher Chua, head of China M&A with Credit Suisse.

Another catalyst fueling rising M&A deals this year is the buoyant capital market, said Merrill Lynch's Cheng, who also advised JD.com's transaction of $3.45 billion shares to Tencent Group in March. "Small companies are increasingly receptive to investment from sector leaders. There is a point where they feel that, valuation-wise, it makes sense to sell."

Globally, the technology sector, especially the dotcom companies, has seen a boom in the past 12 months. ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, surged to 1,558 in February, the highest level in a decade. It now stands at above the 1,400 level.

"The boom in the technology sector, both in China and the US, is very important in the success and future of technology M&A," said Brett McGonegal, CEO of Reorient Group, a Hong Kong-headquartered boutique house that served as financial adviser in Alibaba's acquisition of ChinaVision Media Group Ltd in March.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Bath SEO Company Birmingham SEO Company Bradford SEO Company Brighton and Hove SEO Company Bristol SEO Company Cambridge SEO Company Canterbury SEO Company Carlisle SEO Company Chester SEO Company Chichester SEO Company Coventry SEO Compan

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions