In accordance with the latest data from Zero2IPO Research Center, a leading VC/PE research institution of the Greater China, due to the recovery of international financial environment worldwide and the strong momentum of China's economic growth, China's M&A market sustained an explosive growth in 2011; M&A activity unprecedentedly soared; the number of M&A deals exceeded 1,000. Data also showed that within the research scope of Zero2IPO Research Center, from January to November 2011, China's M&A market completed a total of 1,040 deals, 880 of which disclosed an aggregate transaction value of US$56.51B and an average M&A value of US$64.22M, significantly outnumbering both 622 deals and US$34.80B aggregate transaction value in the full year 2010.
銆銆According to Zero2IPO Research Center, China's M&A market showed several remarkable features during Jan-Nov 2011 as follows:
銆銆China's M&A Market Soars in Number of Deals and Transaction Value, Closing 1,000-plus Deals
銆銆In 2011, boosted by the global economic recovery and the strong development of China's economy as well as relevant national supporting policies on M&A and reorganization, China's M&A market sustained the explosive growth; M&A activity continued to rise. In accordance with the data from Zero2IPO Research Center, during Jan-Nov 2011, China's M&A market completed a total of 1,040 deals, 880 of which disclosed an aggregate transaction value of US$56.51B and an average M&A value of US$64.22M. Specifically, China's market reported 871 domestic M&As, accounting for 83.8% of the total, 764 of which disclosed an aggregate transaction value of US$27.93B, representing 49.4% of the total M&A value, with an average value of US$36.56M. There were a total of 106 outbound M&As, 10.2% of the total, 78 of which disclosed an aggregate transaction value of US$23.43B, accounting for 41.5% of the total M&A value, with an average value of US$300.36M. In addition, a total of 63 inbound M&As were closed, accounting for 6.1% of the total M&A number, 38 of which disclosed an aggregate transaction value of US$5.15B, 9.1% of the total M&A value, with an average value of US$135.53M.
銆銆Figure 1 Year-on-year Comparison of Chinese M&As in 2006 - Jan-Nov 2011
銆銆Figure 2 Year-on-year Comparison of Chinese Domestic M&As in 2006 - Jan-Nov 2011
銆銆Cross-border M&As Report Enormous Transaction Value of Nearly US$30.00B
銆銆In accordance with the statistics of Zero2IPO Research Center, the cross-border M&A transactions witnessed a strong momentum in Jan-Nov 2011. China's M&A market completed a total of 169 cross-border M&A deals, 116 of which disclosed a total amount of US$28.58B. To be specific, there were 106 outbound M&A transactions, 78 of which disclosed an aggregate transaction value of US$23.43B and an average value of US$300.36M. Besides, 63 inbound M&A deals were closed, 38 of which disclosed an aggregate transaction value of US$5.15B and an average value of US$135.53M. Of cross-border M&As, the upsurge of outbound deals was particularly noticeable, which correlated closely to the economic environments both at home and abroad and the policy guidance. Under the general circumstance of ongoing global economic slowdown, Chinese enterprises grasped the opportunities to secure a good lead in global M&A market, with a significant increase in M&A activity.
銆銆With regard to the industry breakdown of the cross-border M&As, the energy & mineral, machinery manufacturing and IT sectors completed 25, 18 and 13 deals separately, involving transaction value of US$13.28B, US$1.95B and US$337M respectively. The energy & mineral sector ranked atop in cross-border M&A transaction value, with a 46.5% share of the total M&A value. Among the large cross-border M&A transactions completed during Jan-Nov 2011, Sinochem Group acquired 40.0% stake in Peregrino oil field offshore Brazil from Norsk Statoil at a price of US$3.07B; China Petroleum & Chemical Corporation acquired the Argentina subsidiary of Occidental Petroleum Corporation at a price of US$2.45B. These two transactions greatly improved the total cross-border M&A value.
銆銆Figure 3 Year-on-year Comparison of Cross-border M&As Involving Chinese Enterprises in 2006 - Jan-Nov 2011
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銆銆Energy & Mineral and Real Estate Outperform Other Sectors, Each Completing 100+ M&A Deals
銆銆From the perspective of industry breakdown, 1,040 M&A deals completed in China's M&A market during Jan-Nov 2011 were widely distributed in more than 20 grade-1 sectors, including energy & mineral, real estate, machinery manufacturing, bio/healthcare, chemical raw materials & processing, construction/engineering, etc. In terms of transaction number, the energy & mineral sector took a lead over other sectors, either in the number or the value, with a total of 133 M&A deals completed, accounting for 12.8% of the total M&A number. In the wake of the slow reviving of financial crisis, the international mining industry failed to break free from the economic recession cycle, which created good outbound M&A opportunities for Chinese enterprises with stable market demands and ample cash. Since 2008, with the continuously heating enthusiasm for outbound M&As of mineral resources, Chinese enterprises frequently went abroad to seek for the appropriate M&A targets and outdid other enterprises in international energy competition. The real estate sector followed with a total of 100 deals completed, accounting for 9.6%. By the end of 2011, as China's real estate macro-adjustment and control policy has begun to function, the real estate sector marked a turn towards rationality and the real estate market began to show a decline in both trading volume and price. However, the transaction number rose all the way in the real estate sector and continuously created new highs. The Machinery Manufacturing sector came third, with a total of 83 deals completed, accounting for 8.1%.
銆銆In terms of deal value, the energy & mineral sector ranked the first by closing 127 deals, which disclosed an aggregate transaction value of US$19.02B, accounting for 33.7% of total M&A value, and an average value of US$159.79M. Jan-Nov 2011 witnessed a series of large sum of outbound M&As, the largest one of which was the Sinochem Group's US$3.07B acquisition of 40.0% stake in Peregrino oil field offshore Brazil from Norsk Statoil. The Finance sector ranked second, as a total of 20 deals with amount disclosed involve a total value of US$5.35B, accounting for 9.5%, and an average value of US$267.49M. The chemical raw materials & processing sector came out third, involving an M&A value of US$4.90B.
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銆銆VC/PE-backed M&As Number 175 with Value Totaling US$9.92B
銆銆The data of Zero2IPO Research Center showed that 175 VC/PE-backed deals were closed in Jan-Nov 2011, 157 of which disclosed an aggregate transaction value of US$9.92B or an average value of US$63.20M. In terms of industry breakdown, 175 deals were mainly distributed in 21 grade-1 sectors, including bio/healthcare, telecom & value-added services, machinery manufacturing, Internet, chemical raw materials & processing, etc. Specifically, the bio/healthcare sector saw the most active VC/PE-backed transactions in Jan-Nov 2011, with a total of 22 M&A deals completed, accounting for 12.6%. The telecom & value-added services industry followed, with a total of 16 M&A deals, accounting for 9.1%. The machinery manufacturing took the third post, with a total of 15 M&A deals, accounting for 8.6%. In terms of deal value, the energy & mineral sector ranked first, with a disclosed value reaching US$3.29B. The clean-tech and machinery manufacturing sectors came out second and third respectively, with a disclosed value at US$2.10B and US$737.21M separately. Due to the continuous downturn of global economy and the depression of both global and Chinese stock markets, the number of overseas listed Chinese enterprises dropped drastically in 2011, and the wait-and-see atmosphere permeated the entire market. The number of VC/PE institutions' exit via IPO fell as well. VC/PE institutions started to consider the multi-exit mode, thus the proportion of exit via M&A was gradually enhanced
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