China Flexes Regulatory Muscle on Nokia Siemens’ Motorla Buy; Huawei Lurks Behind the Scenes

Foot-dragging by China’s anti-trust regulator as it considers Nokia Siemens Network’s $1.2 billion bid for Motorola’s (NYSE: MOT) networking business has the fingerprints of China’s top two networking equipment makers, ZTE (HKEx: 763; Shenzhen: 63) and particularly Huawei, all over it. NSN just announced yet another delay for its Motorola purchase pending a drawn-out approval process by Chinese regulators. (English article) Such foot-dragging seems to have become the modus operandi for the regulator, which has developed a habit of delaying whenever it sees a deal it doesn’t like for whatever reason, and eventually letting such deals die on the vine with little or no explanation. Recent losses of major U.S. deals for both Huawei and ZTE are no doubt stoking the Chinese regulators’ ill feelings towards the NSN-Motorola deal, and an ongoing Huawei lawsuit against Motorola likely isn’t helping the matter. Of course, all of this is politics and has little or nothing to do with the anti-trust functions the regulator is supposed to fulfill. If this is a sign of things to come, China is sure to come under fire for its growing willingness to block global m&a under a process that is completely opaque and smacks of politics.

VERDICT: China will drag its feet on this one but will ultimately approve it or risk facing the wrath of governments in both the U.S. and Europe.