Tuesday, May 12, 2009

The Chinese government is actively encouraging Chinese companies to target distressed North American companies

TO BE NOTED: From the FT:

Chinese buyers sign up for ‘bottom fishing’ tour of North America

By Lisha Zhou

Published: May 7 2009 13:41 | Last updated: May 7 2009 13:41

This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com

Encouraged by sinking stateside valuations, a delegation of up to 600 Chinese entrepreneurs will travel to North America in June on a state-organised “bottom fishing” tour, an organiser source said. The visitors, provincial governors and heads of large state-owned and private companies, will be trawling the market for distressed acquisition targets.

The Chinese government is actively encouraging Chinese companies to target distressed North American companies in any sector but is particularly keen to see resources deals. In support of this position, the NDRC, China’s regulatory body, will fast-track the approval of outbound resources acquisitions.

The Chinese will meet members of the American Chamber of Commerce at a Sino-US economic and trade cooperation forum in Washington. They will also attend a Sino-American Governors’ round-table and a Sino-American Pertinent Enterprise conference in Utah. In Toronto, they will meet face-to-face with members of the Canadian business community.

The Chinese delegation will be led by a high profile political figure, possibly Hu Jintao or Premier Wen Jiabao. A US government insider confirmed that President Obama had met with Hu Jintao at the G20 Summit in London to discuss Chinese investment in the US and the potential for a summer visit to the US by the Chinese Premier.

The tour, organized by the Ministry of Commerce in conjunction with the China Council for the Promotion of International Trade, is scheduled to visit Washington, New York, Chicago, and Salt Lake City in the US before heading to Toronto, Montreal and Vancouver during a 14-day stay from 10-23 June. The visitors will include business leaders from the petrochemical, heavy machinery, automotive, energy, metal mining, IT, telecommunications, media, real estate, education, food, furniture and consumer goods sectors.

In outbound financial services and manufacturing M&A, Chinese bidders have less experience and might find the government more cautious in granting approval. Automotive deals could prove less straight-forward than resources acquisitions, a Shanghai-based dealmaker said. An official close to the NDRC confirmed it would be cautious on automotive deals. Given the potential complications, the source did not expect any Chinese bidders for Volvo."

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