Bottom line: Fosun’s New York IPO plan for US insurer Ironshore could draw strong interest due to Fosun’s China and global connections, and may ultimately raise up to $1 billion later this year.
Fosun eyes NY listing for Ironshore
China’s recent global buying spree has created some interesting investment opportunities, as Chinese acquirers increasingly look to western investors to help pay for their purchases. One such new opportunity is in the headlines this week, with word that Chinese private equity giant Fosun (HKEx: 656) is aiming to launch a New York IPO for its recently acquired US insurer Ironshore. In this growing trend, the Chinese investors are hoping to generate some buzz for this kind of IPO by taking regionally-focused assets and repositioning them as global plays, often with a big China focus. Read Full Post…
Bottom line: A Shandong company’s purchase of nearly half of an Australian beef producer is the latest in a string of offshore meat acquisitions by Chinese firms, many of which could ultimately fail due to cultural differences.
Delisi buys 45 pct of Australian beef firm
Foreign meat companies have become the flavor of the day for acquisitive Chinese buyers, with word that a company called Delisi has just purchased 45 percent of Australian beef company Bindaree. The deal would come just weeks after leading Shanghai food group Bright Food paid a similar price for half of a New Zealand meat company, and a couple of years after the blockbuster purchase of leading US pork products maker Smithfield by WH Group (HKEx: 288).
Media are saying that a recent free trade agreement (FTA) between Australia and China may have helped to facilitate this latest deal between Delisi and Bindaree, and perhaps that’s partly true. But the reality is that China’s fast-growing economy is fueling a strong domestic appetite for meat. China’s own inefficient production also often means that locally produced meat is lower quality and more expensive than comparable products made overseas, which explains why these new offshore tie-ups are quite attractive. Read Full Post…
Bottom line: Declining Wal-Mart China sales and Suntory’s decision to dissolve a China joint venture reflect difficulties foreign consumer names face in the fast changing market, and also challenges posed by local rivals like Bright Food.
Sales fall 6 pct at Walmart China JV stores
Two new consumer stories are shining a spotlight on the difficulties many big foreign brands are facing in China’s tough retailing market, where they compete with both homegrown giants and also smaller names that can quickly gain scale over the Internet. One story reports on falling sales at US retailing giant Wal-Mart’s (NYSE: WMT) China stores, based on rarely seen data from a local joint venture. The other reports that Japanese brewing giant Suntory (Tokyo: 2587) is putting a lid on its 3-year-old Chinese beer-making joint venture.
Meantime, a third outbound M&A story involving Shanghai-based Bright Food shines a spotlight on one of the rising local giants that is posing a growing challenge to the big western consumer names. That deal has the acquisitive Bright, which has made billion-dollar purchases in Britain and Israel, signing another smaller deal to buy half of a major New Zealand meat processor for $200 million. Bright’s agreement to buy the stake in Silver Fern Farms looks similar to WH Group’s (HKEx: 288) blockbuster deal 2 years ago that saw it purchase leading US pork producer Smithfield for nearly $5 billion. Read Full Post…
Bottom line: The purchase of Micron by Tsinghua Unigroup offers a good chance for Sino-US confidence building if Washington signals it will fairly consider such a deal and Unigroup demonstrates its actions are commercially driven.
Micron sale offers chance to boost Sino-US trust
A potential mega-deal that would see China’s Tsinghua Unigroup buy leading US memory chip maker Micron Technology (Nasdaq: MU) could become a major trust-building exercise between China and Washington if handled properly, but could also quickly end in an angry war of words if the opposite occurs. Both sides need to take important steps to ensure fair trade in the case, which is sensitive because it involves the acquisition of a US high-tech leader by a company with close ties to China’s top science university.
For its part, Unigroup could take steps to show its independence from Tsinghua University, and more broadly to show that it is a commercially-focused business that doesn’t make decisions based on government orders or support. For its part, Washington could signal it is willing to consider a deal that appears to pose no threat to national security, even though it would see a major technology company taken over by a Chinese peer. Read Full Post…
Bottom line: WH Group’s decision to sell its stake in Spain’s Campofrio just a year after the purchase reflects its need for cash to pay down a big debt load, and also overly optimistic expectations at the time of the acquisition.
WH Group sells Campofrio stake
Just a year after making its second major global acquisition, Chinese meat processing giant WH Group (HKEx: 288) is having second thoughts about Spain’s Campofrio and is selling its stake in the company. WH Group gave a brief statement on the move, which appears to show it needed the cash and that Campofio was dragging on its financial performance. If that’s the case, this unusually quick flip-flop reflects one of the biggest risks that Chinese companies will face as they shop in an unfamiliar global marketplace that is quite different from their own home market. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 5. To view a full article or story, click on the link next to the headline.
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Alibaba Pictures (HKEx: 1060) To Raise $1.6 Bln in Share Sale For Media Acquisitions (English article)
Mindray (NYSE: MR) Receives “Going Private” Proposal at $30.00 Per ADS (PRNewswire)
WH Group (HKEx: 288) Announces Sale of Campofrio Stake For $354 Mln (GlobeNewswire)
Supermarket and Consumer Electronics Chain Bubugao to Raise 3.4 Bln Yuan (English article)
WandaGroup E-Commerce CEO Resigns, Cites Personal Reasons (Chinese article)
Bottom line: ChemChina might be advised to maintain Pirelli as an independent unit and limit the size of an IPO if succeeds in buying the Italian tire maker and decides to re-list the business.
WH Group, AMC IPOs offer lessons for ChemChina
The headlines are buzzing today with word that state-run behemoth ChemChina may try to re-list Pirelli (Milan: PC) after it purchases the Italian tire maker, which got me to thinking about how the China factor might affect such an IPO. In theory at least, investors might get quite excited about a company they once disdained after its purchase by a Chinese buyer, due to hopes for lower costs and greater profits. But a look at 2 recent cases of major US firms that were acquired by Chinese buyers, then re-listed, shows the reality can vary widely and that a Chinese owner isn’t necessarily a panacea for an ailing overseas company. Read Full Post…
Bottom line: Bright Food’s overseas IPO plans for its British Weetabix and Australian Manassen brands could get lukewarm response due to investor skepticism about their growth prospects.
Bright eyes offshore IPOs for Weetabix, Manassen
I’ve watched with interest over the last 2 years as Shanghai-based Bright Food has quietly gobbled up a stream of high-profile global investments, positioning the company to potentially become one of China’s first international consumer brands to rival giants like Procter & Gamble (NYSE: PG) and Kraft Foods (Nasdaq: KRFT). Now we’re getting further details of Bright’s growing global aspirations, with word that it’s planning a series of international IPOs including potential major listings in Hong Kong and London. Read Full Post…
A summer full of negative news for Sino-foreign trade relations got a rare piece of positive news over the weekend, with word that the US has approved the sale of IBM’s (NYSE: IBM) low-end server business to Chinese PC giant Lenovo (HKEx: 992). The case looks a bit like another deal between the pair of tech giants nearly a decade ago, when IBM agreed to sell its high-profile PC business to Lenovo, only to see the deal run into political headwinds before finally getting approved by Washington. But this latest approval is slightly different, as it comes against a backdrop of heightened trade and other national security tensions between China and the west, especially from the US. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 6. To view a full article or story, click on the link next to the headline.
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WH Group (HKEx: 288) Gains as Biggest Pork Producer Debuts in Hong Kong (English article)
Luxury Car Makers Under Anti-Monopoly Investigation (Chinese article)
Tesla’s (Nasdaq: TSLA) China Trademark Dispute Ends As 2 Sides Reach Agreement (Chinese article)
Two new deals in the food and beverage space are casting a spotlight on China’s growing hunger and thirst for foreign products, and also its desire to import better practices to combat a nonstop stream of domestic food safety scandals. The bigger of the deals will see Hony Capital, one of China’s largest and oldest private equity firms, pay $1.6 billion for British fast-food chain PizzaExpress, which is in the process of expanding in China. The other deal will see the owner of the Red Bull brand of energy drinks for China buy a stake in the parent of Vita Coco, and bring the US company’s flagship coconut flavored drinks to China. Read Full Post…
