Chinese pitch big M&A break-up fees, small stakes to satisfy US regulators
Chinese companies are offering to pay record break-up fees and are willing to settle for minority stakes in U.S. mergers and acquisitions in an attempt to assuage concerns of potential overseas partners about regulatory snags scuttling the deals.
The unprecedented concessions come as China pursues record M&As abroad to offset slowing economic growth at home and a weakening currency. They also come as U.S. scrutiny of Chinese-initiated M&A remains high, making its partners uneasy and forcing several deals to be abandoned.
“These are unusual behaviors and just show that the Chinese want to get the deals done,” said one Hong Kong-based technology banker, who declined to be identified because the person was not authorized to speak to the media.
The stakes for China are particularly high in the technology sector as Beijing seeks to become a global semiconductor powerhouse, relying mainly on offshore M&As to achieve its goal.
The biggest concerns are about the Committee on Foreign Investment in the United States (CFIUS), an interagency panel that scrutinizes deals for national security concerns. CFIUS, which comprises 16 U.S. government departments or agencies, does not publish its decisions or its reasoning for them. Read more