Bottom line: China’s latest plan to buy Finnish chip maker Okmetic could get vetoed on national security concerns, reflecting foreign government concerns about selling technology companies to government-backed entities.
Finland’s Okmetic gets buyout bid from China
China’s ambitions of building a world-class high-tech microchip industry were in the headlines again last week, when the small Finnish chip maker Okmetic (Helsinki: OKM1V) revealed it had received a takeover bid from a government-backed company based in Shanghai. Beijing’s ambitions are understandable, since China currently buys over 60 percent of the world’s microchips to feed its vast manufacturing complex that makes everything from smartphones to computers and home appliances.
But recent resistance in the US and Taiwan has also highlighted reluctance by overseas governments to seeing their companies purchased by the big state-run vehicles that Beijing has recently set up to achieve its aims. Historically speaking, China has also achieved mixed results when the government backs big microchip projects, which often fall victim to government agendas that limit their ability to quickly respond to the fast-changing market. Read Full Post…
Bottom line: A surprise bid by China’s XIO Group for JD Power is unlikely to succeed due to lack of experience and possible concerns over a regulatory veto, but could force rival bidders to raise their offers slightly.
XIO joins bidding for JD Power
In what’s becoming an increasingly common occurrence, an obscure Chinese company has entered the bidding for a major western asset, with word that a buyout firm called XIO Group is eyeing US-based car industry consulting giant JD Power and Associates. I’m not too surprised by any of these bids these days, since many Chinese companies are flush with cash and under orders from Beijing to diversify beyond their home market.
These bids are pushing up the prices for global assets quite a bit, even as many such acquisition attempts ultimately fail. Both of those elements are present in this latest story, since Chinese bidders have become famous for attempting to buy top names like JD Power at any price, regardless of fundamentals of the acquisition target. But in the end, most of these Chinese bids are failing due to lack of experience and concerns about such foreign ownership. Read Full Post…
The following press releases and news reports about China companies were carried on April 2-5. To view a full article or story, click on the link next to the headline.
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China’s XIO Group Vies for US Auto Consultant JD Power – Sources (English article)
Huawei Posts Strongest Revenue Growth in 7 Years for 2015 (English article)
Tesla (Nasdaq: TSLA) Unveils Model 3, May Target Future China Production (Chinese article)
Finland’s Okmetic (Helsinki: OKM1V) Gets Takeover Bid from China’s National Silicon (English article)
Lenovo (HKEx: 992) Changes Motorola Brand Name to Moto on Smartphones (English article)
Bottom line: A high-profile China visit by Google CEO Sundar Pichai reflects warming ties between the company and Beijing, and presages a probable launch of the Google Play app store and Nexus phones in China by the end of this year.
Google’s Pichai in high-stakes game with Beijing
In a move that looks like something from a high-stakes chess game, Google’s (Nasdaq: GOOG) CEO is taking advantage of the huge publicity surrounding a recent triumph of his company’s artificial intelligence (AI) to make a high-profile visit to China. Google is hardly a welcome name in the country, following its high-profile spat in 2010 over Beijing’s strict self-censorship policies that prompted it to shutter its China-based search service.
Since that blow-up, however, Google has more recently been gingerly tip-toeing back to China. Reports through much of last year indicated the company was making necessary preparations to launch a Chinese version of its Google Play app store, possibly in hopes of selling its Nexus brand of smartphones in the world’s largest mobile market. Read Full Post…
Bottom line: A veto threat by China’s insurance regulator ultimately killed Anbang’s bid for Starwood, but the Chinese insurer is likely to pursue more mega-purchases in the more traditional overseas real estate sector this year.
Starwood abandoned at altar by Anbang
In a sudden and unexpected turn in the bidding war for hotelier Starwood (NYSE: HOT), Chinese suitor Anbang has suddenly bowed out of the contest without explanation, paving the way for a merger with US suitor Marriott (NYSE: MAR). Many are marveling at this sudden turn of events, since Anbang earlier this week had submitted an all-cash bid that was 6 percent higher than Marriott’s latest offer for Starwood, operator of the Sheraton and Westin hotel brands.
But anyone in China might say they saw this coming, based on a couple of local media reports from sources at Anbang and China’s insurance regulator. The first of those reports came last week, and saw one of China’s top financial media report that the Chinese insurance regulator was likely to veto a deal over concerns about the size of the investment. That was followed by another report based on comments from an Anbang insider this week, saying the regulator would have no grounds to veto such a deal. Read Full Post…
The following press releases and news reports about China companies were carried on April 1. To view a full article or story, click on the link next to the headline.
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Bottom line: Starwood’s board is likely to reject a new raised offer for the company from Anbang and keep its recommendation to accept a lower bid from Marriott, which offers more certainty of closing a deal and also better long-term prospects.
Anbang ups the ante in Starwood bidding war
The latest development in the bidding war for US hotelier Starwood (NYSE: HOT) looks both expected and unexpected, with word that Chinese suitor Anbang has upped its offer to top the most recent bid from rival Marriott (NYSE: MAR). I say the move looks expected based on my previous assessment that Anbang looked determined to buy Starwood at any price. But the new bid is also a bit unexpected because Chinese media reported last week that the nation’s insurance regulator was likely to veto such a deal, which seemed to show Anbang might drop its pursuit of the purchase that is now valued at $14 billion.
The latest developments also include a response from Marriott, which seems to be saying “enough already”. That would indicate Marriott doesn’t plan to raise its latest bid, which is about 6 percent lower than the new one from Anbang, and instead let Starwood’s board decide which offer to recommend. Read Full Post…
The following press releases and news reports about China companies were carried on March 29. To view a full article or story, click on the link next to the headline.
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Anbang Trumps Marriott (NYSE: MAR), Raises Offer for Starwood (NYSE: HOT) to $14 Bln (English article)
China Bank Profits Flat-Line as Bad Debts Continue to Soar (English article)
Alibaba’s (NYSE: BABA) Cainiao Logistics Arm Forms Alliances, In Same-Day Delivery Drive (Chinese article)
Shanghai Disneyland (NYSE: DIS) Sells Out for Opening Day (English article)
Bottom line: Yum’s China unit is getting a relatively low value due to the country’s unique risks and slowing economy, while YTO’s backdoor listing is likely to get a cool reception due to intense competition in China’s parcel delivery sector.
Yum seeks investors for China unit
Two major IPOs are in the headlines today, one from the more mature fast-food business and the other from the fast-growing but extremely competitive package delivery sector. The first deal has Yum Brands (NYSE: YUM) in talks to sell up to 20 percent of its China division to private equity investors, as it tries to value the unit in the run-up to a highly anticipated IPO. The second has Alibaba-backed (NYSE: BABA) parcel delivery service YTO Express launching a backdoor listing in Shanghai, as it looks for cash to support its operations that are probably losing big money.
Chinese IPOs have gotten off to a slow start this year, both in China and overseas, for a number of reasons. Beijing has banned new domestic offerings for now, in a bid to stabilize markets after a massive sell-off at the beginning of the year. New US listings have also been slow, as many start-ups that previously would have chosen New York now consider listing at home instead. Hong Kong has been the only area with significant new activity, though even there the volatility in China have also depressed the market. Read Full Post…
The following press releases and news reports about China companies were carried on March 24. To view a full article or story, click on the link next to the headline.
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Yum (NYSE: YUM) in Talks With KKR, Others to Sell Stake in China Unit: WSJ (English article)
Terex (NYSE: TEX) to Move Forward with Negotiations With Zoomlion (HKEx: 1157) (Businesswire)
Alibaba-Backed Courier YTO Express to List in China Via $2.7 Bln Reverse Merger (English article)
China Southern (HKEx: 1055) Rules Ban Agent Ticket Sales on Third-Party Platforms (Chinese article)
Xiaomi Beats Out LeEco (Shenzhen: 300104) With Roll-Out of 65-Inch TV (Chinese article)
Bottom line: Anbang is likely to drop its pursuit of Starwood due to objections by Beijing, leaving Marriott as the winner in their brief but frenzied bidding war.
Anbang forced to choose between Starwood and Strategic Hotels
Just a day after I predicted that aggressive Chinese insurer Anbang would make a counter-offer in its bidding war with Marriott (NYSE: MAR) for US hotel giant Starwood (NYSE: HOT), a new report is saying such a bid would almost certainly get vetoed by Beijing regulators. That’s an important new element in this story, since Beijing must approve all global acquisitions of this size by Chinese companies.
This particular move is a bit unexpected, since Anbang almost certainly would have gotten Beijing’s permission before launching its surprise bid earlier this month for Starwood, operator of the Westin and Sheraton brands, which had agreed last year to be bought by Marriott. But in an important twist to the story, Anbang also recently opened talks to pay $6.5 billion for a portfolio of US luxury hotels owned by Strategic Hotels & Resorts. (previous post) Read Full Post…
