China's overseas mergers and acquisitions lifted tide

Recently, the global economic downturn triggered a new wave of Chinese companies’ overseas mergers and acquisitions. The giant oil giant represented by CNOOC is at the forefront of this wave.

According to statistics from Dealogic, an authoritative industry consulting firm, overseas acquisitions by Chinese companies reached a record high of 57.2 billion U.S. dollars in 2012. According to media reports, since October of this year, the total foreign investment of the three major oil companies has reached US$27.67 billion, or approximately 172.59 billion yuan***. Among them, on December 7 CNOOC Ltd. successfully acquired Canada’s Nexen Company for USD 15.1 billion, which is the largest acquisition of overseas listed companies by Chinese companies.

“With the stimulation of high oil prices and the rapid growth in oil and gas demand, overseas oil and gas acquisitions by Chinese oil companies have entered a period of rapid growth, and the shale gas technology in the United States has brought this tide of mergers and acquisitions to a climax.” China University of Petroleum, China Energy Wang Zhen, executive vice president of the Institute of Strategic Studies, said that the overseas acquisition characteristics of China's oil companies are also changing: M&A deals have grown from small to large, and the number of single-merger investment projects has hit new highs; transactions have been made from conventional oil and gas to conventional oil and gas and very Regulations and oil and gas are equally important. They are now expanded to unconventional oil and gas resources such as oil sands and shale gas, and investment in deepwater assets has been increased. Trading targets have shifted from traditional acquisition blocks, enjoying partial rights and interests, to direct equity mergers and acquisitions. All these indicate that China’s oil companies’ overseas acquisitions have entered a new phase.

However, on the road to internationalization, "thorns" coexist with "flowers." According to statistics, the failure rate of overseas mergers and acquisitions by Chinese companies is as high as 70%.

Regarding the overseas mergers and acquisitions of central SOEs, the SASAC emphasized at the meeting of central corporate leaders recently held that, while accelerating the pace of going out, central SOEs must, in accordance with their own development strategies and practices, clarify the key areas and regions for outbound investment and cooperation, and innovate. To adapt to the business model and operation methods of international rules, strengthen the construction of an international talent team, pay attention to the fulfillment of social responsibilities, strengthen supervision of overseas assets, and prevent and control overseas business risks.