Mergers & Acquisitions

Dearth of Chinese technology, media and telecoms mega deals looms in 2017

Transactions see substantial decline from the same period a year ago, says Mergermarket data

PUBLISHED : Tuesday, 18 April, 2017, 7:19pm
UPDATED : Wednesday, 19 April, 2017, 6:56am

The total value of mergers and acquisitions in mainland China’s combined technology, media and telecommunications sector shrunk by 50 per cent in the first quarter, which could augur badly for deal-making in the industry for the rest of this year, according to Mergermarket.

There were 54 China-related technology, media and telecoms deals worth US$8.8 billion recorded in the first three months of this year, down from 60 transactions totalling US$17.5 billion in the same period last year, data from the mergers and acquisitions intelligence service showed.

“That drop-off in both the number and size of deals in the first quarter is a reflection of China’s more stringent capital control, which has been implemented since late November last year,” said Mergermarket financial researcher Sophie Jin.

“There is a probability that China-related technology, media and telecoms deals in 2017 would see their lowest level in years.”

China’s TMT deals top US$100bn for second straight year

The biggest Chinese technology, media and telecoms deal announced in the first quarter was the 6.5 billion yuan (US$944 million) cash purchase of Beijing Xicheng Semiconductor by GigaDevice Semiconductor, a Shanghai-listed supplier of flash memory products.

That was followed by the 6 billion yuan acquisition of an 8.6 per cent stake in Shenzhen-traded Leshi Internet Information & Technology Corp by Tianjin Yingrui Huixin Corporate Management.

Those pale in comparison to the mega deals recorded a year earlier, which included major acquisitions in the United States.

The top Chinese technology, media and telecoms deals in the first quarter of last year were the US$4.7 billion acquisition of Greatwall Information Industry by China Great Wall Computer Shenzhen, and the US$3.5 billion takeover of Hollywood studio Legendary Entertainment by Wanda Media.

“We expect a dearth of new mega deals to follow,” Mergermarket’s Jin said.

She added, however, that transactions involving the semiconductor industry may be less impacted by the government’s capital controls since expansion initiatives in this field form part of the country’s national development strategy.