find the latest legal job
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
Legal Inhouse / Lawyer / Company Secretary
Category: Other | Location: Brisbane QLD 4000
· Fantastic Company · Potential to be Part Time / Flexible Work Pattern
View details
Part Time Risk & Compliance Officer
Category: Other | Location: Brisbane QLD 4000
· Brisbane City · Flexible Part Time Hours
View details
Enter the China M&A slump

Enter the China M&A slump

DOING deals in China just got riskier. Following the block of Coca-Cola's $2.4 billion takeover of the nation's biggest juice manufacturer, two of Australia's top law firms confirm M&A work in China is changing.

DOING deals in China just got riskier. Following the recent block of Coca-Cola’s $2.4 billion takeover of the nation’s biggest juice manufacturer, two of Australia’s top law firms have confirmed M&A work in China is changing. 

When China’s new merger oversight board, set up last year, blocked Coca-Cola’s friendly, but politically controversial, takeover of Huiyuan, some commentators saw it as a warning sign for cross-border mergers and acquisitions deals in China. 

While such deals had been on the rise last year, according to Dealogic figures showing there was $98.5 billion in cross-border deals proposed last year, in rejecting the Coke deal the Chinese government seemed to be more interested in protecting the domestic market from foreign intervention than boosting its home-grown brands overseas. 

Newly released Bloomberg figures show M&A activity generally dropped by 44 per cent in the Asia Pacific region for the first quarter of 2009, compared with the same period last year. 

The M&A market in China has come off from where it was 6 months, 9 months, and 12 months ago, Allens Arthur Robinson partner Campbell Davidson, who is based in the firm’s Hong Kong office, told The New Lawyer. 

“I think it would be fair to say, based on what people say in the market here, in Shanghai and Beijing, that foreign direct investment has certainly slowed down,” he said. 

But the Coke deal and its demise can be easily attributed to the global financial crisis generally, the Allens partner said. It was announced in September last year, before Lehmanns and before the market took a “hammering”, Campbell said. “I think if they’d waited three to four weeks they may well have gone forward on slightly different terms … They were paying full price according to a lot of commentators.”

But as well as the global downturn that has inspired a new uncertainty in the broader economy, Campbell said, “even at the bet of times for foreigners to be investing in China it’s seen as higher risk than investing in home markets”. 

Martyn Huckerby, a Mallesons Stephen Jaques M&A partner based in the Shanghai office says the GFC has affected M&A China. “We are seeing the same range of enquiries and the same number of potential deals, but the transactions are taking pace at a slower rate.”

The Mallesons partner said that as share markets fall away, buyers are looking to enter transactions only when they feel they can get a “good deal” in the current market. 

“It’s a way of offsetting the potential risk of undertaking transactions at this time,” Huckerby said. “A number of deals have stalled or are on hold because of that.”

“You have a general conservatism creeping into the market where people are not wanting to undertake a transaction unless they have a sense they are getting in at the bottom of the market,”  he said. 

This insight from the Allens and Mallesons partners comes despite an Allens press release two weeks ago that M&A activity in Australia and out of Greater China are “the bright spots in an otherwise lackluster first quarter of regional deal activity”. 

The firm cited Bloomberg figures showing that outbound investment from China accounts for 70 per cent of all M&A activity in that country. 

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Enter the China M&A slump
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Nov 23 2017
Education a passion for YL president
Promoted by University of Melbourne. Melbourne Law Masters student Phoebe Blank is successfully j...
Nov 23 2017
Anti-radicalisation programs playing ‘second fiddle’ to terrorism laws
Several academics have questioned the balance between Australia’s counterterrorism legislation and...
 William Ah Ket
Nov 23 2017
‘Bamboo ceiling’ thought piece wins inaugural law prize
A paper that explores the idea of affirmative action to achieve greater diversity among members of A...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...