2017年-数据局_德勤：中国在北美和欧洲地区海外MA项目趋势和预测_27页_1mb

Summary of China Outbound M&A Activities in Europe and North America (August 2017)

Core Content

China's outbound M&A activities in Europe and North America have seen significant growth over the past five years. The report highlights the key drivers, government strategies, investment environment characteristics, and future projections for these markets.

Main Trends

• Growth in Deal Volume: China's outbound M&A activities have grown rapidly, with Europe and North America being the preferred target regions since 2012.
• Industry Focus: The financial services (FS) and consumer products & services (CP&S) industries have been the top targets, while technology, media, and telecommunications (TMT), life sciences and healthcare (LSHC), and energy and resources (E&R) have shown strong growth.
• Shift in Economic Structure: The transformation of China's economy, with the service sector becoming the main driver of growth, has led to increased interest in high-tech, healthcare, and financial services sectors.

Key Observations

• Europe:
  • Accounted for 28.6%–41.8% of deal volume over the past five years, with a CAGR of 32%.
  • TMT and LSHC are key growth areas, along with real estate (RE) in the UK due to the devaluation of the British Pound.
  • The European market is favorable due to attractive valuations, tax incentives, and open business environments.
• North America:
  • Accounted for around 23% of deal volume, with a CAGR of 36.4%.
  • TMT and LSHC are the most active industries, and the US remains a preferred destination due to its innovation, talent pool, and IP protection.

Key Drivers of Outbound M&A

• Internal Business Growth Needs:
  • Acquisition of key capabilities and assets
  • Rapid market entry
  • Business portfolio expansion
  • Market share increases and profitability improvements
  • Defensive competition strategies
• Government Strategies:
  • "Going Out" policy
  • Belt and Road (B&R) Initiative
  • Supply-side reform

Government Policies

• Tax Service Facilitation:
  • Introduced in 2015, these measures support outbound investment by improving tax agreements and providing guidance.
• Simplification of Approval Process:
  • In 2016, the NDRC simplified the approval process, reducing the need for approval for large overseas investments.
• Financing Support:
  • Policy funds and investment corporations, such as the Integrated Circuit Industry Investment Fund and CIC Overseas Direct Investment Corporation, provide financial backing for strategic deals.
• Capital Control:
  • Increased restrictions on capital outflow, including retroactive approval for transactions over $5 million and more stringent checks on large deals.

Investment Environment in the US

• Positive Aspects:
  • Innovative atmosphere with leading high-tech and internet companies
  • Access to high-quality talent
  • Lower interest rates
  • Strong IP protection
  • Open business environment
• Challenges:
  • Obstruction by local authorities due to antitrust and national security concerns
  • Political uncertainty from Trump's administration
  • Stringent labor laws
  • Union bargaining power
  • Appreciation of the US dollar
  • Slow economic recovery

Investment Environment in Europe

• Positive Aspects:
  • Devaluation of the British Pound makes UK targets more attractive
  • Attractive and reasonable valuations
  • Lower interest rates
  • Tax incentives
  • Open business environment
  • Less competition in the M&A market
• Challenges:
  • Obstruction by local authorities
  • Political uncertainty due to Brexit and populism
  • Stringent labor laws
  • Work council bargaining power
  • Cultural diversity and integration challenges
  • Slow economic recovery

Projections

• China-to-US M&A:
  • Overall deal volume is expected to increase
  • US will continue to attract investors seeking advanced technology
  • A stronger US dollar and political uncertainty may dampen enthusiasm
• China-to-Europe M&A:
  • Overall deal volume is expected to increase
  • Germany will remain a key target for technology acquisition
  • The UK will see increased investment due to the weakened pound, but political instability may reduce investor interest
  • The Belt and Road Initiative will drive investment in Central and Eastern Europe

Main Challenges

• Cultural and Legal Differences:
  • Identified as the top challenge in terms of both controllability and impact
  • Requires significant attention and preparation from Chinese investors
• Corporate Transparency Requirements:
  • Highly controllable but have less impact on deal success
• Political Risks and Protectionist Trends:
  • Generally unavoidable but have minimal impact on M&A success
  • Should be considered and addressed before entering a deal

Importance of Effective Post-Merger Integration (PMI)

• Unrealized Deal Values:
  • 60% of China outbound M&A deals that fail to meet expected values are due to ineffective PMI
• PMI Benefits:
  • Maintains business momentum
  • Achieves synergies
  • Establishes platforms for competitive positioning

Conclusion

China's outbound M&A activities in Europe and North America continue to grow, driven by internal business needs and government support. While the US and Europe offer attractive investment environments, they also present challenges such as regulatory hurdles, political uncertainty, and cultural differences. Effective PMI is crucial for maximizing the value of these transactions and ensuring long-term success.