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China M&A deal count up 18% in 2010, says new report

Deal activity is becoming a vital component of the China growth story, according to a new report from Baird, a global investment bank with extensive experience in middle market, cross-border M&A and offices in Shanghai, Beijing and Hong Kong.

In its twice-yearly China M&A Market report, Baird examines emerging trends in the world’s second largest economy. With inbound deal count up 18% in 2010 and outbound deal count up almost 25%, the outlook for cross-border deals in 2011 and beyond is positive, according to Anthony Siu, Managing Director and Head of Asia Investment Banking.
“Last year, M&A rebounded more quickly than in other regions. Based on shifts in global capital flows, China should become an increasingly important participant in cross-border M&A over time,” says Siu.
Improving economic conditions provide a solid foundation for increased deal flow, and globalisation of businesses is driving cross-border M&A activities.
The gap between inbound and outbound M&A narrowed significantly in 2009 and 2010. In addition, inbound dollar volume more than doubled and reached a record level in 2010. Majority-interest M&A deals in China reached record levels in 2010, while active sectors included industrials, showing continued strong growth over most metrics. Computers & electronics, real estate and finance remain most active. Outbound deal value increased by 65% in 2010, spurred by large minority-stake transactions.

This year and in the longer term, Chinese companies will pursue acquisitions that provide access to new markets, valuable resources, technology expertise, and leading brands, according to the Baird report.  Overseas acquirers will be attracted to a favourable business environment for investing in China’s excellent growth prospects.  

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