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Value of domestic and inbound M&A deals drops to 5-year low

By Feng Jianmin  (Shanghai Daily)

11:12, January 31, 2013

THE overall value of China's domestic and inbound mergers and acquisitions fell to a five-year low in 2012 due to a weak global economy, while outbound deals hit a record high on growing appetite for overseas investments, an industry survey showed yesterday.

There were 2,953 publicized domestic and foreign inbound deals last year in China, excluding financial and private equity transactions. The number includes deals on both the Chinese mainland and Hong Kong. In 2011, 3,744 such deals were completed, PricewaterhouseCoopers said in a report yesterday.

The value dropped 28 percent to US$97.1 billion from 2011, the report said. However, China's outbound deals jumped 54 percent to a record US$65.2 billion.

"The slow pace of recovery in Western economies along with a slowing Chinese economy put many domestic and inbound deals on the back burner," said Roger Li, PwC China transaction services partner.

"On the contrary, there is great pent-up demand as witnessed by the record growth in the value of outbound deals, spurred on by companies in China taking advantage of favorable buying conditions overseas."

He said a growing number of private companies on the mainland are taking larger-sized overseas projects. While state-owned enterprises focus on buying foreign resources and energy firms, the private sector is looking mainly at the consumer and technology sectors.

Gabriel Wong, leader of PwC China corporate finance, said outbound acquisitions will continue to rise this year as the company has seen many deals in the pipeline.

Europe remained the most popular destination for domestic companies due to relatively low asset valuations and mature technologies, the PwC report said.

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