The following press releases and news reports about China companies were carried on March 25. To view a full article or story, click on the link next to the headline.
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Microsoft (Nasdaq: MSFT) Says Has Developed First Windows 10 for China Govt Use (Chinese article)
Second Carmike (Nasdaq: CKEC) Shareholder Calls AMC’s Offer Too Low (English article)
Huayi (Shenzhen: 300027) HK Unit Invests 230 Mln Yuan in Korean Film Maker HB (Chinese article)
Wanda Says Film Affiliate Raised $2.4 Bln in Share Sale (English article)
ZTE (HKEx: 763) Announces New Date for Annual Results Announcement (HKEx announcement)
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…
Bottom line: China’s airlines are likely to permanently ban independent travel agents from selling on Qunar and other third-party platform operators, dealing a serious blow to their air ticketing businesses.
Dead end near for Qunar air tickets?
The bad news just keeps coming for travel agent Qunar (Nasdaq: QUNR), with word that its online sales platform could soon be banned for sale of tickets from China Southern (HKEx: 1055; Shanghai: 600029), the nation’s largest airline. Media are reporting that China Southern is preparing to roll out a wide-ranging new policy to govern the agents who sell its tickets. A key part of that will ban agents from selling China Southern’s tickets over third-party platforms like the one that Qunar operates.
This particular bad news is significant but also incremental, since China’s major airlines have been slowly freezing out Qunar this year due to complaints from people who buy their tickets over the company’s online platform. That platform allows independent travel agents to sell tickets on Qunar’s site, with a growing number of agents using deceptive or even fraudulent practices to make sales. Read Full Post…
Bottom line: China Lodging looks like a good long-term bet to become a leading Chinese hotel operator, drawing on an alliance with France’s Accor in its ongoing transformation to become a manager and franchisor of major brands.
China Lodging transforms
Chinese insurer Anbang is making headlines this week with its surprise and intense bid for US hotel giant Starwood (NYSE: HOT), but an equally exciting hospitality story is happening behind the scenes with the quieter transformation of homegrown hotelier China Lodging (Nasdaq: HTHT). The US-listed hotel operator rose to early prominence with its chain of low-cost Hanting hotels, which have become a mainstay for China’s growing legions of budget-conscious travelers.
But more recently the company, also known as Huazhu, has signed a major tie-up with French hotel giant Accor (Paris: AC), owner of the better-known Sofitel and Ibis brands. That move, a first-of-its-kind for a homegrown Chinese hotel brand, should help China Lodging improve its operations and give it a potential entree onto the global stage. 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…
Bottom line: Wanda’s new FIFA sponsorship is an opportunistic and savvy move both politically and financially, while CMC’s new smaller soccer investment also looks like a good play to win goodwill from Beijing.
Wanda, CMC in new soccer plays
China’s recent fascination with global sports deals continues, with word of major new tie-ups involving 2 big fans of President Xi Jinping’s recent call to improve the nation’s poor performance in soccer. The larger deal has an opportunistic Wanda Group signing on as China’s first top-tier sponsor of FIFA, the world soccer body whose reputation has suffered lately due to a major corruption scandal. The second deal has the acquisitive China Media Capital (CMC) investing in in SoccerWorld, a British operator of sports stadiums.
Both deals have a strongly political element, since Chinese President Xi Jinping is personally a big soccer fan and has appealed to China’s private sector to help improve the nation’s performance at the world’s most popular sport. Some of China’s other top corporate leaders have also answered that call, including Alibaba (NYSE: BABA) founder Jack Ma, leading web portal Sina (Nasdaq: SINA) and electronics retailing giant Suning (Shenzhen: 002024). Read Full Post…
Bottom line: Midea could buy another global brand following its purchase of Toshiba’s home appliance business, while hometown rival Gree will also feel pressure to make a small to mid-sized overseas acquisition in the next 1-2 years.
Midea in MOU for Toshiba’s appliance unit
Following several days of rumors, struggling Japanese tech giant Toshiba (Tokyo: 6502) has confirmed it will sell a controlling stake in its home appliance business to Midea (Shenzhen: 000333), extending a fledgling movement by Chinese buyers abroad. The move could pressure other Chinese rivals, most notably Gree (Shenzhen: 000651), to follow in the footsteps of Midea and Haier (HKEx: 1169), which is also in the process of buying General Electric’s (NYSE: GE) appliance business.
From a bigger perspective, this particular trend looks a bit like what happened several decades ago in the older industry for TV sets. That trend saw Asian buyers purchase big western brands in the fading TV industry, with storied names like Zenith and RCA ultimately get gobbled up. Fast forward to the present, when most of those older brands no longer exist or are insignificant, which could hint at what may lie ahead for these new purchases by the Chinese companies. Read Full Post…
The following press releases and news reports about China companies were carried on March 23. To view a full article or story, click on the link next to the headline.
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Apple (Nasdaq: AAPL) Bets New 4-inch iPhone to Draw Converts in China, India (English article)
Huawei Matebook PCs Coming Soon, Lenovo (HKEx: 992) Rolls Out New Thinkbooks (Chinese article)
Opera CEO Says Didn’t Want to Sell Company to Qihoo (NYSE: QIHU) (Chinese article)
Qunar (Nasdaq: QUNR) Says Working with Airlines to Restore Online Ticketing (Chinese article)
CMC Invests Tens of Millions of Dollars in SoccerWorld Sports (Chinese article)
Bottom line: Anbang is almost certain to make a new counter bid for Starwood above Marriott’s latest offer, and will ultimately win the bidding war due to its determination to make an acquisition at any cost.
Marriott trumps Anbang bid for Starwood
The sudden bidding war for US hotel operator Starwood (NYSE: HOT) is rapidly intensifying, with hometown suitor Marriott (NYSE: MAR) sharply raising its original bid for the company to trump a more recent offer from Chinese insurer Anbang. The move surprised many, including myself, since the new bid represents a 10 percent raise from Marriott’s earlier offer for Starwood made late last year. I had predicted that Marriott might raise its original bid as much as 5 percent, but that it would ultimately shy away from getting into a real bidding war.
Starwood has said it will accept Marriott’s new offer and even signed a deal. But we should also point out it said just days ago it also said it would accept Anbang’s offer as well. So the major question now is whether Anbang will try to top Marriott with a new bid before an April 8 deadline. I suspect the answer to that question is “yes”, since Anbang seems determined to buy Starwood at any price. Read Full Post…
Bottom line: ZTE’s temporary relief from sanctions for illegally selling US products to Iran is probably contingent on its assistance in a broader probe of the matter, and could result in more arrests and sanctions against others in the case.
ZTE assisting in US probe
In a move that surprised me, Washington is indicating it might reduce the stiff punishment it previously announced for telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) for illegally selling US-made equipment to Iran. In the past, Washington has shown little tolerance for Chinese companies that break the rules, even though Beijing often protests such inflexibility.
But this time is slightly different from the past, since it involves a single company rather than an entire industry. Still, this kind of temporary relief does seem a bit unusual for Washington. Accordingly, I suspect that ZTE is quietly cooperating behind the scenes with an investigation that could ultimately incriminate many other companies and individuals that helped it to circumvent Washington’s rules prohibiting the sale of US-made networking equipment to Iran. Read Full Post…
