China’s biggest overseas acquirers to face tightened deal scrutiny by Beijing
The new directive published by the Ministry of Commerce shows closer scrutiny on overseas mergers and acquisitions worth at least US$300 million
China will launch a campaign to more closely scrutinise overseas mergers and acquisitions (M&A) carried out by Chinese companies, with an emphasis on deals worth more than US$300 million, according to an official document jointly issued by seven ministry-level authorities late Thursday.
The release said the measures would help regulate and monitor rising overseas investment by Chinese companies, and also help facilitate a smooth roll-out of the “Belt and Road Initiative”.
Beijing eased restrictions on outbound investment in 2014, introducing a registration-based system to simplify and quicken the processing of smaller M&A deals deemed non-sensitive.
Deal value reached an all-time high of US$225.4 billion in 2016, more than double the previous record of US$102 billion announced in 2015, according to data provider Dealogic.
But the overseas buying binge by Chinese companies, including headline grabbing acquisitions of Hollywood studios, luxury property and sports franchises, triggered concerns on capital outflows and yuan depreciation, prompting authorities to make a policy U-turn in late 2016.