| Companies from Mainland China have played an active role in global Mergers &Acquisitions market since 2003. The most significant events in 2004 were: ChinaMinmetals Corporation bided for Noranda and Lenovo Group acquired IBM's PersonalComputing Division. In 2005, CNOOC bided for Unocal, the ninth oil company inAmerica, when Haier Group bided for Maytag and CNPC successfully acquiredPetroKazakhstan. The amount of money relating to China's overseas M&A activities in2005 was estimated to be 14 billion US dollars.As the concept of "China Acquisition" attracted more attention from overseas communities,the professionals in investment industry, different media and governments of target's parentcompany raised a lot of questions about these M&A activities. The arguments were notonly related to political issues like ideology difference, but also related to the worry ofChina's immature domestic environment in labor, intellectual property and environmentprotection. The ability to complete the deal and run merged company efficiently wasanother hot issue. If these cases failed to proved their commercial motives andfeasibilities, the claim of political manipulation would be considered as the only reason.This paper divided overseas M&A cases into 2 subgroups: natural resource related andnon-resource related. Two cases from each were picked up – one success and one failure– to research 2 assumptions: (1) Comparing with average premium in American M&Ahistory, if China's companies tend to pay higher premium and the level of premiumcorrelates to the success of a deal;(2) If all bids have enough commercial feasibilities byfinancial examination and what kind of bid tends to succeed more easily.The results of this paper showed: (1) The overpayment claim in acquisitions fails to beproved and the correlation between premium level and success of cases is insignificant;(2)Target companies with small size and comparatively weak financial ability seems moreeasily to be acquired. |
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