Record M&A deals set in 2010
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China's rapid economic growth and its push to consolidate industry have propelled merger and acquisition deals in China to a high in 2010, a report showed yesterday.
A 16 percent increase from a year ago to a record 4,251 transactions was posted last year, PricewaterhouseCoopers said in a report.
The value of the deals jumped an annual 27 percent to more than US$200 billion, the report added.
PwC said there was a clear trend for Chinese companies to go outbound to secure M&A deals as such activities overseas had grown more than 30 percent to a record 188 transactions worth a combined US$38 billion last year.
Nelson Lou, a PwC partner, said Chinese companies have shown an increasing interest in acquiring quality overseas assets and this strong trend is not expected to wane this year.
"China's appetite for overseas assets is insatiable, with natural resources a key target as the country aims to secure the resources it needs to fuel its economic growth," Lou said.
Outbound deals by Chinese firms are expected to grow, driven by demand for natural resources as well as the need to buy technologies and know-how.
"The policies and direction set by China's new Five-Year Plan are likely to support continued M&A activities as the government aims to continue domestic consolidation and restructuring of industries while ensuring foreign investment is optimized and the pace of going abroad is accelerated," said Andrew Li, another PwC partner.
The United States is identified as a growing strategic target for overseas M&A activities. In 2010, Chinese firms sealed 32 deals against 21 in 2009. The European Union, Australia, Africa and Asia are also important areas for possible M&As.
PwC also believes private equity, especially domestic PE firms, is emerging as a vital source of capital for private companies in China.
