China’s M&A activity will rebound in second half as some dealmakers press on despite coronavirus restrictions, says PwC
- While deals are seen dropping sharply in the first half, some private equity buyers are still negotiating with sellers despite travel restrictions, cities in lockdown
- China’s total M&A deal value fell 14 per cent in 2019 to US$559 billion, the lowest in five years, driven primarily by a sharp 37 per cent drop in outbound transactions, according to data released by PwC on Thursday
China’s mergers and acquisitions activity has taken a devastating hit from the health crisis gripping the country. But levels are likely to rebound in the second half of the year as some dealmakers press on with negotiations despite the travel restrictions and quarantine measures put in place to combat the spread of the coronavirus, according to a PwC industry analyst.
The epidemic could even spur more M&A activity, as companies see the merits of shifting some of their operations out of China to other Asian countries, said David Brown, deals leader for Asia-Pacific at PwC.
For the year to February 10, M&A activity in China and Hong Kong plunged to 84 deals worth US$8.41 billion, data from Mergermarket shows. That represents a fall of 54.1 per cent in the number of transactions, and a drop of 76.6 per cent in their value, from a year ago.
Deals had already suffered a weak year because of uncertainties related to the US-China trade war and the government’s nationwide campaign to reduce corporate debt, which held up bank financing for buyers.
China’s total M&A deal value in 2019 fell 14 per cent to US$559 billion, the lowest in five years, driven primarily by a sharp 37 per cent drop in outbound transactions, according to data released by PwC on Thursday.
But a rebound is widely expected in the second half, so that by the end of 2020 inbound and outbound activity will probably be at similar levels to 2019, said Brown.