Chinese firms thwarted overseas

NEW YORK • Anbang's dropping of its US$14 billion (S$19 billion) offer for Starwood Hotels & Resorts is not the first time a large Chinese deal has bitten the dust. 

A quick look through recent history shows there are in fact a slew of deals involving Chinese companies that have been either aborted or spurned. Last year, the number of failed deals involving Chinese companies was 110.

Just this week, Affymetrix, a DNA-testing firm in the US, recommended against an offer from Origin Technologies, whose backer is a Chinese investment firm, citing concerns about approval from Chinese and US regulators.

Other stifled deals include Tsinghua Group's almost US$4 billion offer for a stake in US disk-driver maker Western Digital, and China Resources' play for  Fairchild Semiconductor, which ultimately opted for a lower bid than the US$2.6 billion on the table.

These deals came to a naught because of a probe by Cfius (Committee on Foreign Investment in the US), which scrutinises foreign takeovers for potential national security concerns. Even non-US firms have put the kibosh on Chinese deals, fearing Cfius' reach. 

In January, Dutch group Philips ended a US$2.8 billion offer from China's GO Scale Capital for its lighting component unit, citing US regulator concerns.

While Swiss target Syngenta welcomed ChemChina's US$44 billion offer, concern that the US authorities will stymie the deal has been weighing on Syngenta's share price. 

Another question increasingly coming into play is whether Chinese companies, which typically pay cash, can find the money.

Sixty-two per cent of failed deals by Chinese firms were cash bids, data compiled by Bloomberg shows. Only 50 of the 1,164 deals that were withdrawn or terminated had a value of more than US$1 billion, and 16 of those were in the past two years.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 02, 2016, with the headline 'Chinese firms thwarted overseas'. Print Edition | Subscribe