a) The successful application to holding 2008 Olympic game, the entrance to WTO and also the successful holding of APEC Conference have demonstrated the great development potential of China as well as the unlimited investment opportunity in Chinese capital market. b) The incorporation of reform and opening policy into law system has guaranteed a stable […]
Indirect M&A follows two steps as below： a) Set up a new subsidiary company or holding company; and b) Merge the target company through the newly established company
Direct M&A is a purchase method where the purchasing company directly buys the asset and/or equity of the target company. The legal entity of the newly established foreign invested company can be either the purchasing company or the target company. The legal entity should not only take over the assets but also the liabilities.
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
