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Chinese companies overseas subsidiaries into the m
Editor:admin  Date:2014-08-18  Browse:3209 Text Size Print

Last month, the China Enterprise Group three cell groups (Sanpower Group) founded a subsidiary has acquired the 165-year long history of the British department store chain House of Fraser Ltd .. 
For relatively unknown Nanjing Xinjiekou Department Store Co., Ltd. (Nanjing Xinjiekou Department Store Co., referred to as: Nanjingxinbai), this is a high-profile acquisitions. Nanjingxinbai acquisition of House of Fraser 89% of the shares, the valuation of about 480 million pounds (about 809 million U.S. dollars). But perhaps the most unusual is that three cell groups chose a listed subsidiary in mainland China, the acquisition of House of Fraser, rather than through the acquisition of overseas subsidiaries. 
In recent years, the valuation of more than 500 million U.S. dollars of transactions numbered. According to data provider Dealogic, last year, financial leasing companies listed in Shenzhen Bohai Leasing (Bohai leasing company) to $ 1.3 billion acquisition of the container leasing company Seaco SRL. In addition, in 2012 the Shanghai-listed construction equipment maker Sany Heavy Industry Co., Ltd. (Sany Heavy Industry Co.) and Chinese-funded enterprises CITIC Group Corporation (Citic Group Inc., referred to as: CITIC Group) teamed up to $ 694 million acquisition German concrete pump maker Putzmeister holding Limited (Putzmeister Holding). 
Dealogic data show that since 2008 the acquisition of listed companies from mainland China's overseas direct a total value of $ 17 billion, accounting for only 5% of the capital value of such transactions conducted over the same period. 
In the history of the largest Chinese companies to acquire U.S. companies trading example. Last year Shuanghui International Holdings Limited (Shuanghui International) to $ 4.7 billion acquisition of U.S. pork producer Smithfield Foods Inc .. Now renamed Wanzhou International (WH Group) Shuanghui is registered in Hong Kong, the direct acquisition of Smithfield, rather than through a subsidiary in Shenzhen-listed Henan Shuanghui Investment & Development Co., Ltd. (Henan Shuanghui Investment & Development Co.) were. Henan Shuanghui pork operates business in China. 
Netherlands Chilean banks (ING BANK) China corporate finance head David Wu said the business development strategy and financing sources that may affect their decision in this regard, for example, sometimes a business may or simplified management structure for financing and other specific reasons for preferring domestic subsidiaries through overseas acquisitions; still, most companies are still more inclined to make overseas acquisitions by overseas subsidiaries, mainly because of the tax, consider listing prospects, corporate governance and other aspects of . 
One of the biggest reasons for Chinese enterprises in overseas mergers and acquisitions by foreign subsidiaries is to avoid the transaction requires the approval of the central government. 
If the buyer is a Chinese domestic enterprises, foreign-funded enterprises acquisition targets, then the transaction would be approved by the Chinese Ministry of Commerce, the National Development and Reform Commission, the State Administration of Foreign Exchange at the same time. But if the buyer is a subsidiary of Chinese enterprises overseas, and they do not need to trade in the domestic financing, then you do not have to obtain the approval of the above-mentioned government agencies. 
Of course, many of these overseas subsidiaries only a shell company, the need to obtain financing to help the domestic parent company, say, or the need to inject the parent as a guarantor sources. In these cases, M & A transactions still need to be approved these three government agencies. 
On the other hand, companies may choose one of the reasons by domestic subsidiaries of overseas acquisitions is the need for financing in the country, especially in seeking financing from banks. 
Merrill Lynch (Bank of America Merrill Lynch), head of China M & Ellis Chu said that if the buyer is an entity operating the business side, and that they have in the past and is directly related to the acquisition of a record deal, so easier to get a loan from the bank; If the buyer is a listed company with public information available for reference, the seller will also feel more secure. 
In addition, a Chinese private company may actually be more willing to deal themselves, not just to avoid the shareholders or the China Securities Regulatory Commission (referred to as: China Securities Regulatory Commission) veto risk transactions through a listed company to be traded in mainland . American Paul Hastings LLP (Paul Hastings LLP, PHJ.XX) mergers and acquisitions department partner Ka Yan in Shanghai, said the reaction of shareholders is unpredictable. 
However, there are other reasons for the acquisition through overseas subsidiaries. • Baker & McKenzie LLP (Baker & McKenzie, BKM.XX) specializes in mergers and acquisitions partner Wu Mei Zhen (Bee Chun Boo), said Chinese companies may also be passed in other parts of Hong Kong, the Netherlands and Singapore, and State registration of a foreign entity for the acquisition to obtain tax benefits. 
Taking into account the use of overseas subsidiaries in the acquisition of advantages, widely considered the three cell groups through Nanjingxinbai acquisition is unlikely to herald the beginning of a new trend. 
However, Macquarie Group (Macquarie Group Ltd., MQG.AU), head of mergers and acquisitions in Asia Griffiths (Richard Griffiths), said the long term, given the Chinese mainland enterprises and markets are gradually integrated more fully with the global market they expect (in Chinese mainland-listed) companies in the future will be more involved in the global mergers and acquisitions business in the past.

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