China Deal Watch
Chinese companies have been buying up assets all over the world. This graphic, updated weekly, takes a close look at what China is acquiring, and where. The numbers reveal a lot about the country’s global ambitions.
Poly Real Estate Group Co Ltd agreed to buy
a minority stake in
Poly Hong Kong Holdings Ltd
$360 million. Here’s how this deal compares to China’s other overseas acquisitions this year:
largest foreign acquisition by a Chinese company this year
in foreign mergers and acquisitions
from the same period in 2016
Chinese companies continue to seek deals after last year’s record acquisition spree, when they announced nearly $250 billion of foreign purchases. The nation’s overseas dealmaking started as a hunt for the raw materials needed to feed steel mills, support industrial production and keep the nation’s factories humming—the so-called old economy.
As China grew, so did its appetite for foreign acquisitions. They’ve shifted focus to acquiring the brands and technology China needs to transition to an economy driven by domestic consumption more than exports, labeled here as the new economy.
As China’s dealmaking exploded, the types of companies it’s buying have changed. That change is easy to spot when you look at the industries of the target companies.
Before 2013, China’s overseas dealmaking was dominated by state-owned companies acquiring iron ore deposits in Australia, energy producers from Canada and copper mines in Africa. More than half of the purchases were of energy and commodities companies. Now private entrepreneurs are snapping up marquee assets like Italian football teams, American film studios and French fashion houses while government-backed buyers purchase chipmakers and crop technology. For a better sense of how China’s targets have changed, let’s look at annual deal volumes by industry.
The charts below show China’s favorite destinations have shifted over time. Every deal of at least $100 million since 2006 is displayed.
China has made energy acquisitions across the world, with the biggest being Cnooc Ltd.’s 2012 agreement to buy Canada’s Nexen Inc. for $14.3 billion following smaller deals in Central Asia, Europe and South America.
The growing number of deals has attracted close government scrutiny within China and around the world. Several roadblocks have started appearing that are slowing the pace of acquisitions:
Methodology: Target and acquirer names are as of today. All other data are as of the deal announcement date. All deals involving the acquisition or sale of control of a company or asset for strategic purposes, as well as minority purchases, private equity investments and venture capital rounds of financing, are included. Both pending and completed deals are shown.
Aggregate volume figures are calculated using enterprise value, which is equal to the equity value plus the target’s net debt. Individual deals display the equity value. Geographical references are based on country of risk, which may differ from country of domicile.
Deals where the acquirer is a Chinese private equity fund managed by a general partner whose country of risk is outside China have been excluded. This accounts for the small difference in aggregate deal volume between this story and figures shown in the MA<Go> function on the Bloomberg Professional service, which classifies deal data in greater depth and includes these deals.
Bloomberg classifies companies by tracking their primary business activities as measured by their primary source of revenue. Target companies are classified under one of 73 industry groups as shown on the MA<Go> Bloomberg function. This graphic regroups the 73 industries into 25 broader categories.
Construction: Building Materials; Engineering & Construction; Home Builders; Shipbuilding
Home/Office Products: Home Furnishings; Household Products/Wares; Housewares; Office/Business Equipment; Office Furnishings
Logistics: Packaging & Containers; Storage/Warehousing; Transportation; Trucking & Leasing
Manufacturing: Hand/Machine Tools; Machinery-Diversified; Metal Fabricate/Hardware; Miscellaneous Manufacturing; Textiles
Mining: Forest Products & Paper; Iron/Steel; Machinery-Construction & Mining; Mining
Utilities: Electric; Gas; Water
Traditional Energy: Coal; Oil & Gas; Oil & Gas Services; Pipelines
Automotive: Auto Manufacturers; Auto Parts & Equipment
Aviation: Aerospace/Defense; Airlines
Electronics: Electrical Components & Equipment; Electronics
Entertainment: Entertainment; Leisure Time; Toys/Games/Hobbies
Environment/New Energy: Energy-Alternate Sources; Environmental Control
Finance: Banks; Closed-end Funds; Country Funds-Closed-end; Diversified Financial Services; Insurance; Investment Companies; Private Equity; Savings & Loans
Food/Beverage: Beverages; Food; Food Services
Health: Biotechnology; Healthcare-Products; Healthcare-Services; Pharmaceuticals
Internet/Software: Computers; Internet; Software
Media/Ads: Advertising; Media
Property: Lodging; Real Estate; REITS
Retail/Wholesale: Apparel; Cosmetics/Personal Care; Distribution/Wholesale; Retail
Other: Holding Companies-Diversified Unclassified
For multi-target deals, the full value of the transaction is credited to the industry and region of the first target company listed in the deal entry shown in the MA<Go> function on the Bloomberg Professional service.