Type Main Features Benefits Horizontal M & AMerge a competitor a) Achieve economies of scale b) Increase market share c) Enhance industry concentration Vertical M & AMerge a supplier or customer in the supply chain a) Extend the scope and depth of the business b) Save the transaction cost c) Improve coordination and specialization Mixed M & […]
a)Operation synergy: 1+1>2 Achieve economies of scale Take good advantages of the strengths of each side b)Financial synergy Reduce tax burden Smooth the fluctuation of cash flow Reduce capital needs Fully utilize free cash flow Reduce financing cost Improve finance capability c)Realize the potential value of the undervalued target company d)Increase the industry concentration e)Enhance the […]
Time Rule Content Before September1995 N/A No entity was legally allowed to transfer any corporate shares and state shares to foreign invested enterprises or foreign entities. August 1999 Provisional Ordinance Concerning Acquisition of State-owned Enterprise by Foreigner No specific rules were published for detailed implementation although it was allowed for foreigners to buy state-owned enterprises. November 2001 […]
How many stages has foreign M&A experienced in China? What are the characteristics of these periods?
StageTime periodMain Features I1995-1998 a) Most M&As incurred in manufacturing industry b) The buyers are mostly large international capital c) The targets are focused on listed company II1998-2001 a) The scope of M&A extended to electronic manufacture, glass, rubber and food industries b) Indirect control mode was adopted III2001-Present a) Foreigners have begun […]
The relevant competent authority requires for the foreign investors in material domestic M&A to make submission and review, for the foreign investors involved in overseas material M&A to make submission and review, as well as exemption of the anti-trust review.
In order to maintain the peaceful and competitive market order and social public interest, realize the effective allocation of social resources, promote the healthy development of competitiveness of enterprises, market economies have adopted the antitrust legislation and practices for implementing governmental regulation in the sense of antitrust in the M&A of enterprises.
Type of M&A (Million Dollars) Requirement Asset M&A In accordance with the requirement for newly established foreign-invested company Equity M&A Registered capital<2.1 Total Capital < 10/7 * Registered capital 2.1<5 Total Capital < 2 * Registered capital 5<12 Total Capital < 2.5 * Registered capital Registered capital>12 Total Capital < 3 * Registered capital
The price for the actual transactions may rationally float against the specific valuation results. Special state provisions should be considered on the transfer of the state-owned assets. Foreigners are prohibited from diverting capital abroad in a disguised form by transferring share rights or selling assets at a price obviously lower than the valuated one.
The M&A Provisions requires that the assets appraisers shall adopt the appraisal methods internationally used.
Type of M&A Calculation Method Asset M&A Total pain in capital Equity M&A Only purchase equity Original registered capital Purchase added equity Original registered capital+ Added capital
