China: An M&A Obstructionist 中国：并购阻挠者
Just when China was improving its reputation as a global arbiter of fair trade, a recent string of delays is throwing an embarrassing spotlight on just how opaque and bureaucratic the country’s deal approval process remains for global mergers and acquisitions (M&A). Beijing needs to move quickly to reverse this worrisome trend that has seen China hold up a growing number of global deals. Otherwise, China risks gaining a reputation as an obstructionist to the natural flow of global deal making.
Consumer goods giant Unilever (London: ULVR) became the latest company to voice its frustration over China’s slow deal approval process when it said last week that Beijing had yet to approve the $700 million sale of its Skippy brand to food products maker Hormel Foods (NYSE: HRL). (company statement) Unilever didn’t say why Beijing had yet to sign off on a deal that had already been approved in other relevant markets, and simply said it expected to receive regulatory approval in China sometime later this year.
The Unilever delay follows a string of other recent global M&A deals that won regulatory approval in all relevant global markets, only to be held up for months due to unexplained delays by Chinese regulators.
Last month, global fruit giant Dole (NYSE: DOLE) said the pending sale of its worldwide packaged foods and Asian fresh fruit business was being held up due to failure to receive approval from Beijing. (previous post) In its statement at the time, Dole said that China’s anti-monopoly regulator, the Ministry of Commerce, didn’t even accept its application for approval of the $1.7 billion deal until December last year, or a full three months after the deal was first announced. No reason was given for the regulator’s delay in accepting the application, nor for its delays in approving a deal.
China has also delayed major global deals in the tech sector. One such case saw the Ministry of Commerce hold up the sale of Motorola’s telecoms equipment business to Nokia Siemens Networks for nearly a year. In that instance, the deal was first announced in July 2010 and was quickly approved by other major governments, only to remain in limbo until April 2011 when China finally approved the deal without any explanations for its lengthy review. More recently China also held up the sale of Motorola’s cellphone business to Google (Nasdaq: GOOG), again taking months longer than other major markets to finally approve the purchase last May.
These delays are a major burden for the companies involved, bringing them millions of dollars in extra costs and also disrupting their normal business. While anti-monopoly regulators in any market need to protect competition, they also have an equally important responsibility to consider all deals in a timely manner and to be as transparent as possible in their review process.
This growing string of delays shows China’s regulator needs to make a stronger effort to boost both its transparency and speed in its deal approval process. Otherwise, it risks tarnishing its image as an effective protector of fair trade, and gaining a reputation as a major and costly obstacle to the natural flow of global M&A.
Bottom line: China needs to take action to streamline its M&A approval process or risk being labeled an obstructionist to global deals.
Related postings 相关文章:
