There was a moment earlier this year when China Inc. appeared to be single-handedly keeping M&A bankers in their Maseratis and Patek Philippes. Chinese companies have announced $128.5 billion of proposed, pending or completed outbound deals in 2016, well ahead of the $106.6 billion from the U.S., according to data compiled by Bloomberg.
Transactions valued at billions of dollars have now fallen by the wayside. Philips sold shares in its lighting business on the Amsterdam stock exchange after a U.S. government panel objected to a $2.8 billion sale to China’s GO Scale Capital on national-security grounds. The same issue scuppered China Resources’ $2.5 billion bid for chipmaker Fairchild and Tsinghua Unisplendour’s attempt to invest $3.8 billion in disk-drive maker Western Digital.
There are also domestic hurdles. Zoomlion failed to gain support from China’s foreign-exchange regulator to convert yuan to dollars for the Terex purchase, an issue that’s also holding up a take-private offer for antivirus software business Qihoo 360. Anbang Insurance‘s $14 billion bid for Starwood Hotels was scrapped in March, with Caixin Online reporting that Beijing’s insurance regulator had voiced opposition.
The biggest of the crop — ChemChina’s $43 billion acquisition of Swiss pesticide and seed-maker Syngenta — remains in limbo after several farm-state senators called on the U.S. government to again play the national security card.
In the mean time, the value of outbound deals in May looks set to decline for the third straight month, according to data compiled by Bloomberg, with the value of completed transactions heading to its lowest level since April 2015. With the yuan again weakening and some analysts predicting renewed capital outflows, regulators are even less likely to look kindly on currency-sapping overseas purchases. Don’t be surprised if the M&A tally continues to decline.
China’s outbound M&A total
That’s something that should really keep the bankers up at night: They don’t get their big payday unless a deal goes through.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.