M&As looking good in China

Updated: 2013-12-04 11:41

By Amy He in New York (China Daily USA)

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M&As looking good in China

A customer pushes a shopping cart toward his vehicle outside a Wal-Mart store in East Peoria, Illinois. Wal-Mart Stores Inc, the world's largest retailer, told the Wall Street Journal in October that it was looking into possible M&A deals with China-based companies to help boost its lackluster performance there so far. Daniel Acker / Bloomberg

North and South American business leaders say merger-and-acquisition opportunities in China for 2014 are increasingly "compelling," according to a new survey.

The percentage of respondents from the Americas who said M&A deals in China are "compelling" or "very compelling" rose to 54 percent from 33 percent last year, the survey from Thompson Reuters and Freeman Consulting Services showed. Respondents from Europe and the Middle East, Africa (EMEA) who expressed the same feelings increased to 38 percent from 13 percent last year, according to the survey.

All 120 global executives - chief financial officers, treasurers and other managers - in the survey ranked North America as the most attractive region for M&A opportunities, the survey showed.

The percentage of respondents from the Americas rating North America as "compelling" or "very compelling" was 54 percent, up from 33 percent last year; 69 percent of Asian respondents felt that way, an increase from 36 percent, and 56 percent of EMEA respondents, up from 36 percent last year.

"North America, as opposed to Europe, is seen as a growth market," said Jeffrey Nassof, vice-president of Freeman Consulting Services. "There's a consensus that the US economy is in recovery and where the growth opportunities lie."

The survey - entitled 2014 Outlook for Investment Banking Services - was conducted during the third quarter. Overall, Thompson Reuters and Freeman said they found this year's survey to be much more positive in tone compared to last year's, which was conducted during continuing news of the European debt crisis.

The survey's results also showed that Americas and EMEA respondents' interest in Chinese, Indian and Southeast Asian assets "grew significantly".

The percentage of EMEA respondents who ranked North America and India as most compelling was 56 percent, up from 44 percent and 7 percent, respectively, followed by Southeast Asia at 44 percent, an increase from 23 percent.

On their outlook on 2014 M&A deals, 45 percent of all respondents said that "confidence in future growth will make management aggressive" in pursuing them.

"We're seeing that Asian firms are a lot less confident in pursuing M&A than US and European firms, and when we look at what Asian companies are seeing as deal drivers, it's lower valuation driving value-based deals, and high quality of assets on the market," said Nassof.

"It suggests to us that while the US and Europe are looking to buy high-growth companies and are really pursuing expansionary deals," he said, "Asian companies are still looking closer at valuation, trying to pick up under-valued assets, cherry picking, doing opportunistic deals."

In October, Wal-Mart Stores Inc told the Wall Street Journal they were looking at possible M&A deals in China, a key market where the retail giant was having trouble repeating its performance in the US because of stiffening competition.


(China Daily USA 12/04/2013 page2)