WSJ: “The made-in-China label isn’t such a deal breaker anymore.
After being burned by a series of high-profile failures, Chinese companies are learning to navigate the delicate political and regulatory landscape for takeovers in the U.S.
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Major U.S. companies remain essentially unattainable to Chinese buyers. So are many firms that can be tied to national security or critical technologies. Still, Chinese firms are stepping up their investments in the U.S. by targeting smaller companies, going after minority stakes and avoiding the most sensitive acquisition targets.
Wanxiang America, a unit of China’s Wanxiang Group, is paying $257 million to buy A123 Systems, a U.S. government-backed maker of lithium-ion batteries, after an early attempt at a purchase collapsed.
China hasn’t given up on big deals. The Committee on Foreign Investment in the U.S., a government group that reviews foreign acquisitions, is expected to decide in coming weeks whether to approve two multibillion-dollar deals by Chinese firms. A Cfius spokeswoman declined to comment.
The deals getting the green light so far are smaller. Last week, U.S. regulators approved the Chinese acquisition of a U.S. battery maker despite political resistance and an initially icy reception. Wanxiang America Corp., a unit of China’s Wanxiang Group, is paying $257 million to buy A123 Systems, AONEQ -3.57% a U.S. government-backed maker of lithium-ion batteries, after an early attempt at a purchase collapsed.
“You just need to understand the rules, follow the rules, be very transparent and let them make the decision,” says Pin Ni, president of Wanxiang America, who started the U.S. offshoot out of a home office in Chicago.
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Last year, Chinese buyers agreed to spend more than $10 billion in 46 deals to acquire U.S. companies or stakes in U.S. firms, according to Dealogic. The volume was higher than the Chinese total from 2009 through 2011 combined. The tally included the sale of Kansas City, Mo.-based movie-theater chain AMC Entertainment Holdings to Wanda Group for $700 million.
The U.S. still trails Canada, where Chinese firms announced $23 billion worth of deals for Canadian companies or stakes last year. The total includes the pending $15.1 billion acquisition of Canadian oil-sands operator Nexen Inc. NXY.T +1.39% by Cnooc Ltd., 0883.HK -0.13% the Chinese state energy giant.
via China Steps Up Buying in U.S. – WSJ.com.
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