Schmittzehe & Partners | China Business Consultancy

M&A: Acquisitions continue a pace, but trip over protectionist policies

13th April 2006

Summary:
Foreign corporate and institutional acquisitions and investments continue a pace, but the government has been stepping-in to protect what it sees as strategic domestic companies. With similar behaviour overseas, it is hard for foreign powers to be critical. This is only a natural reaction as states become fearful of the increasing globalisation driven by worldwide M&A activity.

Full Article:
As excitement around the China and Asia economies continues, we see the successful raising of ever more funds targeted to this region. As a result, institutional investment activity, just like corporate activity, remains buoyant.

Corporates

Motorola and Siemens, strategic and venture capital investors in China, have recently announced renewed interest and investments in China. Motorola, one of the oldest VC investors in Mainland China, after a long quiet period, signalled it is re-entering the China market with new investments in two Chinese companies, and Siemens, another longstanding investor in China, have signalled similar intentions.

Siemens Venture Capital will invest in a wide variety of areas, including infrastructure technologies, communications, medical solutions and automotive technology. Motorola has announced three sizable investments in China through its VC arm, Motorola Ventures. It has invested in venture firm Shanghai NewMargin Venture Capital Enterprise, China Internet Technology and Service Ltd. and Legend Silicon Corp. Motorola has become one of the largest investors of Shanghai NewMargin, a $35 million venture fund that focuses on high-growth technology companies in China. Motorola also invested an undisclosed amount in China Internet Technology, parent company of Shenzhen Shenxun Information Technology Development Co. Ltd. (SXIT) and formed a strategic partnership with SXIT. In addition to an undisclosed investment in Legend Silicon, Motorola is working with the company to design and make chips for mobile TV.

PCCW IMS China has closed an acquisition of a 50 percent stake in China Netcom Corporation (CNC) subsidiary CBC Broadband. PCCW IMS is an indirectly wholly-owned subsidiary of PCCW. The acquisition cost PCCW IMS China 318 million RMB.

CK Life Sciences of Hong Kong has announced the purchase of 80% of U.S.-based Vitaquest International for $166 million. CK Life, controlled by Hong Kong billionaire and private equity investor Li Ka Shing, has acquired other