Tag Archives: Little Sheep

Fosun Closes In On Forbes Purchase

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Fosun closes in on deal to buy Forbes

Private equity investor Fosun International (HKEx: 656) is closing in on a landmark but controversial deal to buy US publishing giant Forbes Media, which would become the first purchase of a major western media firm by a Chinese company. The deal is almost certain to draw attention in the US where Forbes is based, with some calling for the government to stop the sale over concerns that Fosun could interfere with Forbes’ editorial independence and block publication of sensitive content. Read Full Post…

Yum’s Little Sheep: Tasty Food Or Indigestion?

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Little Sheep growth stalls during Yum review

An interesting new Chinese media report is questioning whether US fast food giant Yum (NYSE: YUM) is spoiling the Little Sheep chain of hot pot restaurants it acquired just a year ago. The numbers released by Yum certainly don’t look very so-so, and comments by an unnamed restaurant official don’t paint a very rosy picture either for Little Sheep under Yum’s management. But it’s probably still too early to say whether this acquisition will be a success, and I would still be willing to bet we’ll see Little Sheep start making some new and exciting moves later this year. Read Full Post…

News Digest: June 6, 2013

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The following press releases and media reports about Chinese companies were carried on June 6. To view a full article or story, click on the link next to the headline.
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  • EU To Impose Anti-Dumping Tariffs On Chinese Solar Panels (English article)
  • Ultrapower Loses Exclusive Rights To China Mobile’s (HKEx: 941) Fetion (Chinese article)
  • China Opens Anti-Dumping Probe Into EU Wines (Chinese article)
  • Little Sheep Brings Hollow Returns For Yum (NYSE: YUM) 1 Year Later (Chinese article)
  • Snowball Finance Completes $10 Mln In B Round Funding (Chinese article)

Mutton Scandal Gives Yum New China Headache

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Mutton scandal gives Yum’s Little Sheep indigestion

As if its problems weren’t bad enough in China, global fast food giant Yum (NYSE: YUM) is getting a new round of indigestion in its most profitable market from a new food safety scandal that gets my personal award for “grossest” scandal of the year. China followers will know I’m talking about the latest revelations that some unscrupulous food processors illegally treated meat from dead foxes and minks to look like mutton, and then sold the product to unsuspecting restaurants. Read Full Post…

China Approves Google’s Motorola Buy 中国批准谷歌收购摩托罗拉

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I have to admit that perhaps I was wrong in my initial skepticism about Beijing’s motivations in repeatedly delaying approval for Google’s (Nasdaq: GOOG) purchase of Motorola Mobility (NYSE: MMI), speculating that its foot-dragging might have been motivated by political factors. (previous post) But now that the anti-monopoly regulator has finally approved the deal, I feel like I should actually congratulate it for addressing an important concern that was probably the real source of the delays, namely the potential that Google might give Motorola phones preferential treatment for its Android smartphone operating system at the expense of other major handset makers who also rely heavily on the popular OS. The long-awaited approval, which was delaying closure of a $12.5 billion deal first announced last August, finally came after Google agreed to conditions required by the Chinese regulator aimed at making sure that Android remains open and free to everyone, and that Google treats all cellphone makers who chose to use the operating system equally. (English article) I’ll be the first to admit that my first reaction to most actions by China’s anti-monopoly regulator is one of skepticism, since it has a history of allowing political considerations into its decisions that are largely unrelated to its main mission of ensuring that major M&A deals don’t harm market competition. The regulator’s bias was on glaring display in 2009, when it vetoed Coca Cola’s (NYSE: KU) plan to buy leading domestic juice maker Huiyuan (HKEx: 1886), citing monopolistic concerns even though most observers believed that Beijing simply didn’t want to see the promising domestic brand swallowed up by a foreign company. The regulator seemed to be changing its ways last year when it approved the purchase of another promising Chinese brand by a foreign name, in this case allowing Yum Brands (NYSE: YUM), operator of the KFC and Pizza Hut chains, to buy Little Sheep, operator of China’s largest hot pot restaurant chain. (previous post) The delays behind this latest approval of Google’s purchase of Motorola look like a smart move to me, aimed at addressing the very real concern by many of Android’s users that they might lose access to the OS if Google gives preferential treatment to Motorola. The major regulators in the US and Europe were unlikely to focus on this particular concern, since most of the major cellphone makers that use Android are based in Asia, such as Taiwan’s HTC (Taipei: 2498) and Korea’s Samsung (Seoul: 005930). A growing number of Android users are also in China, most notably Huawei and ZTE (HKEx: 763; Shenzhen: 000063), which are 2 of the world’s fastest growing players in the smartphone space. Thus the regulator was clearly addressing very real concerns from these and other domestic smartphone makers about becoming second-class Android citizens after a Google-Motorola merger, hence the regulator’s decision to impose its conditions. At the end of the day I’m quite encouraged by this action, and increasingly confident that we’ll see more decisions from the regulator based on market concerns rather than political considerations.

Bottom line: China’s long-delayed approval of Google’s Motorola purchase was due to real anti-competitive concerns, and reflects growing maturity at the Chinese regulator.

Related postings 相关文章:

◙ Huawei-Motorola Rumors Look Logical 华为收购摩托罗拉手机业务传言看似合情合理

◙ Google Tussles With China on Motorola 延迟批准摩托罗拉移动交易 中国政府对谷歌仍心存芥蒂

◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

China Flexes Anti-Monopoly Muscle in Hard Disks

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New comments from China’s anti-monopoly regulator show it is preparing to play an increasingly active role on the global M&A stage, reflecting the nation’s growing importance as not only a major global manufacturer but increasingly also a consumer of many products. The comments from a top Commerce Ministry official, in this case regarding the pending acquisition of Hitachi’s (Tokyo: 6501) memory storage business by Western Digital (NYSE: WDC), look quite intelligent to me, showing that China is taking its new role quite seriously and that it could soon become a major gatekeeper for big global M&A deals, a job now mostly performed by the US and European Union. (English article; Chinese article) In this particular case, the head of the ministry’s anti-monopoly bureau, Shang Ming, made suitably cautious comments at a year end event in Beijing by saying his department is concerned the deal could harm competition in the global market for hard disc drives “to a certain extent”. With this kind of comment, Shang is indicating his department is likely to approve the deal, but only after Western Digital and Hitachi take steps to ensure the global market for disc drives remains competitive, most likely by selling off some assets to another rival. Such conditions are relatively common in global M&A, and are frequently imposed by the US and European regulators before they approve many major global deals. In fact, China has previously imposed such conditions on other major global M&A in its brief history of regulating such deals, though in the few such cases to date conditions have been relatively mild. These latest comments indicate that could change in the future as China looks to play a bigger role in global markets. All this looks good if the Commerce Ministry continues to develop itself as a fair judge dedicated to free trade. It showed movement in that direction last month, when it approved the purchase of leading hot pot chain Little Sheep by Yum Brands (NYSE: YUM), operator of the KFC chain, casting aside concerns by some that the deal might be vetoed for more nationalistic reasons. Global companies will undoubtedly be watching carefully for the final decision in this Western Digital deal; but final conditions that are reasonable and fair will give more credibility to China as it seeks to establish itself as a serious player in regulating the flow of major global M&A.

Bottom line: China’s careful approach to Western Digital’s pending purchase of Hitachi’s hard disc drive business reflects its growing maturity as an arbiter of major global M&A.

Related postings 相关文章:

◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

◙ China OKs Nestle Buy, Opens Door for Big Brand M&A

◙ Troublesome Timing As China Approves NSN-Motorola 中国监管部门批准诺基亚西门子购买摩托罗拉网络业务时机不佳

China OKs Nestle Buy, Opens Door for Big Brand M&A

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Following its landmark decision last month to let KFC operator Yum Brands (NYSE: YUM) purchase Little Sheep (HKEx: 968), China’s largest hot pot chain, Beijing has once again approved another foreign acquisition of a domestic big brand, this time allowing Nestle (Switzerland: NESN) to buy candy maker Hsu Fu Chi (Singapore: HSFU), a move that should encourage more such M&A. (English article) China’s controversial 2009 decision to veto the purchase of leading domestic juice maker Huiyuan (HKEx: 1886) by Coca Cola (NYSE: KO) sent a chill through the cross-border M&A market for major Chinese brands, as many interpreted the move — theoretically made on anti-monopolistic concerns — as a nationalistic reaction by Beijing technocrats reluctant to see a promising domestic name swallowed up by a foreign multinational. The veto created so much concern that it took more than 2 years for another company, Yum, to try a similar acquisition, again testing Beijing’s commitment to free trade and openness to letting its healthy companies get acquired by foreigners. This rapid succession of approval for the acquisition of Little Sheep followed by Hsu Fu Chi, Nestle’s biggest purchase in China to date, seems to indicate that China will take a more balanced approach to foreign M&A of its healthy brands in the future, which could provide a nice lift for stocks in other listed big brands like Huiyuan that enjoy a strong reputation in China. Of course, China will now expect reciprocal treatment in the West, such as for Shanghai-based food maker Bright Food’s pending acquisition of Australia’s Manassen, announced in August. (previous post)  I don’t see any problems for this kind of cross-border M&A in popular consumer areas like food and restaurants, though the tech space may continue to be sensitive as evidenced by the derailment of Huawei’s planned purchase of a small US tech firm early this year. (previous post) All that said, this latest approval by China’s anti-monopoly regulator should breathe some healthy new life into cross border M&A in the consumer sector, bringing good news for both acquirers and acquisition targets both inside and outside China.

Bottom line: China’s approval of the sale of a leading candy maker to Nestle reaffirms its new commitment to allowing big consumer brands be purchased by Western firms, paving the way for more such acquisitions.

Related postings 相关文章:

◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

◙ Bright Finally Finds Tasty M&A in Australia’s Manassen 光明食品终於觅得“佳偶”

◙ Huawei quits 3Leaf buy, but stay tuned for more

Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

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Some 7 months after Yum Brands (NYSE: YUM) first announced its bid to buy leading hot pot chain Little Sheep (HKEx: 968), China’s anti-monopoly regulator has finally approved the deal, in a major breakthrough not only for Yum and Little Sheep but also for China. (company announcement) This deal looked smart for both Yum and Little Sheep from the start, but investors had worried that the Commerce Ministry would use the anti-monopoly excuse to veto it over concerns that were more nationalistic in nature. Such a veto, which had led Little Sheep’s Hong Kong-listed shares to trade well below Yum’s offer price, would have sent a chill through the market, demonstrating that China was unwilling to let its best-known brands be purchased by foreign buyers following the Commerce Ministry’s 2009 veto of Coke’s (NYSE: KU) purchase of Huiyuan (HKEx: 1886), China’s leading juice brand. Interestingly, Huiyuan’s shares shot up 16 percent as well after approval of the Yum-Little Sheep deal, as investors bet that perhaps Huiyuan itself could become a takeover target again under the Commerce Ministry’s new enlightened approach, perhaps by Coke rival Pepsi (NYSE: PEP), which announced a major overhaul of its own China strategy earlier this week. (previous post)  Following the Little Sheep decision, I would expect to see strong gains in shares of not only Huiyuan but also other up-and-coming Chinese brands in the weeks ahead, as investors bet that they could also now become takeover targets. Likewise, we could also see gains in shares of mid-sized Western consumer brands, as Western governments will now also be under pressure to approve such deals to show their own commitment to fair trade. As to Yum and Little Sheep, I would look for rapid expansion for the Chinese hot pot chain both at home and perhaps even abroad towards the end of next year, after Yum, China’s largest fast-food operator through its KFC brand, has a chance to learn more about the company and formulate a plan to leverage its strong name and popular hotpot format.

Bottom line: China’s approval of Yum’s purchase of Little Sheep will open the door to more buying of well-known consumer brands by both Western and Chinese firms in each other’s markets

Related postings 相关文章:

◙ Little Sheep Left Waiting at Regulator’s Door 小肥羊仍在监管机构大门外苦等

◙ Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？

◙  Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥

Little Sheep Left Waiting at Regulator’s Door 小肥羊仍在监管机构大门外苦等

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More than half a year after announcing its plan to purchase top Chinese hot pot chain Little Sheep (HKEx: 968), Yum Brands (NYSE: YUM), owner of the KFC and Pizza Hut chains, has learned it will have to wait just a bit longer for the anti-monopoly regulator’s decision on the deal — an potentially ominous sign for a regulator that has shown a past tendency to consider nationalistic elements alongside commercial ones in such deals. But at the end of the day, the fact that the regulator hasn’t vetoed this deal yet indicates some debate is probably taking place in the organization, and I still think the chances of an approval are greater than 50 percent, especially as China tries to show its commitment to fair trade in light of US Congress legislation that would punish Beijing for manipulating its currency. According to a new statement filed by Little Sheep to the Hong Kong Stock Exchange, the initial 30 day period for China’s Commerce Ministry to consider Yum’s purchase, worth some $500 million, ended on July 27. (company announcement) The ministry elected to extend that period by another 60 days, which again ended on September 27. Still lacking a final determination, the regulator again exercised its final option for another 60 day extension, meaning a final decision should come by late November. So what does all of this mean? Shareholders clearly don’t think it bodes well, bidding down Little Sheep stock by 12 percent to HK$5.39, or 17 percent below Yum’s offer price of HK$6.50 after the announcement. From a monopolistic standpoint, Yum is clearly China’s largest restaurant operator and would add to that position, but only slightly, by buying Little Sheep. But based on past behavior, I suspect nationalistic concerns are more at play here, as Little Sheep is China’s biggest hot pot chain and a promising home grown brand. Still, I think that at the end of the day fair trade advocates at the Commerce Ministry will win out to their nationalistic peers in this decision, as China seeks to show the world it is willing to play by global rules, and we should see an approval of this deal just before the late November deadline.

Bottom line: Delays in government clearance for Yum’s pending purchase of Little Sheep indicate internal debate at the anti-monopoly regulator, but the deal should finally get a green light next month as China tries to show its commitment to fair trade.

Related postings 相关文章:

◙ Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

◙ China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊

News Digest: October 26, 2011

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The following press releases and media reports about Chinese companies were carried on October 26. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ Little Sheep: (HKEx: 968) Regulator Extended Yum Takeover Review By 60 Days (English article)

◙ CNOOC (HKEx: 883) Limited Announces Third Quarter Results (PRNewswire)

◙ Shanda (Nasdaq: SNDA), Kaixin001 Establish Social Game JV – Source (English article)

◙ Chinese Authorities Ban Online Prescription Drug Sales (English article)

◙ Starbucks (Nasdaq: SBUX) Celebrates Its 500th Store Opening in Mainland China (Businesswire)

Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？

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The latest quarterly results from Yum Brands (NYSE: YUM) are once again all about China, with strong performance from that market salvaging an otherwise dismal period for the operator of the KFC and Pizza Hut chains. But for followers of this company, what’s equally interesting in Yum’s quarterly results announcement is what’s NOT included, namely any mention of its pending purchase of leading Chinese hot pot chain Little Sheep (HKEx: 968), which is still awaiting regulatory approval nearly 6 months after the deal was first announced. First a look at the third quarter numbers, which showed that Yum’s China business boomed in just about every way, even as operating profit in its home US market slipped 16 percent. (company announcement) Yum’s China revenue leaped 35 percent, while its China same-store sales and operating profit rose 19 percent and 7 percent, respectively. The only negative China figure in the results was store margins, which slipped to 21.3  percent this year from 25.2 percent in 2010 as inflation in China took a toll. But amid all those rosy figures, there was no mention at all of Yum’s pending $500 million acquisition of Little Sheep, a relatively straightforward deal which the company first announced in April but still hasn’t received regulatory approval. (previous post) Yum provided a brief update of sorts on the deal in its last quarterly results by mentioning it had set aside funds for the purchase, seeming to indicate it still believed the deal would get regulatory approval. (previous post) It’s hard to read too much into the failure to mention the deal in its latest results announcement, as perhaps there’s just nothing new to add. The most recent US-China trade frictions that have seen the US Senate approve a bill to punish China for currency manipulation could add an interesting twist to this deal. Beijing’s approval of the Little Sheep deal now would send a strong message that it’s committed to fair trade, and could help dispel some of the anti-China rhetoric on Capitol Hill. Still, one never knows with China, and the regulator could also choose to veto the deal in an angry response to the US Senate’s move, which would only heighten tensions. I honestly think the latter is less likely to happen as China has traditionally tried to defuse this kind of friction. Accordingly, I wouldn’t be surprised to see the Little Sheep deal finally approved in the next month as a goodwill gesture aimed at mollifying tensions.

Bottom line: China is likely to finally approve Yum Brands’ pending purchase of the Little Sheep hot pot chain in the next month to try to diffuse trade tensions with the US.

Related postings 相关文章:

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

◙ China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊

◙  YUM and Little Sheep – A Sweet Match If China Approves 美国百胜购小肥羊：甜蜜姻缘还靠中国政府成全