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Mergers & Acquisitions
BusinessBanking & Finance

Hong Kong businesses step up M&A deals by latching on to China’s economic rebound

  • M&A deals have reached US$35.9 billion mergers this quarter through September 25, a 102 per cent jump over the preceding quarter
  • CP Pokphand Co’s US$4.1 billion proposal to buy 43 related companies involved in mainland pork-related business is the biggest deal

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A staff member checks a pig's condition at a farm in Zhongjiang county in southwestern Sichuan province in November 2019. The Charoen Pokphand unit in Hong Kong is seeking to entrench itself in China with the biggest M&A deal this quarter. Photo: Xinhua
Enoch Yiu
Hong Kong-based businesses have stepped up their merger and acquisition (M&A) deals this quarter by latching on to economic recovery in mainland China, suggesting beaten-down asset prices could attract more investors ahead.
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Deals involving Hong Kong companies have reached US$35.9 billion through September 25, according to data compiled by Refinitiv. They are 102 per cent higher than in the preceding quarter, when transactions slumped to a seven-year low.

The renewed appetite is a relief for bankers and brokers seeking to shore up their fees after a torrid first half when the Covid-19 pandemic and street protests combined to send the city’s economy into its worst recession on record. China’s economic rebound in the second quarter, as well as efforts to strengthen economic ties within the Greater Bay Area, could help arrest the slump, Financial Secretary Paul Chan Mo-po has said.

“Companies and their bankers have become used to adopting digital methods to negotiate deals online,” said Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers. “It suggests the worst is over and we are likely to see more M&A and economic activities in the fourth quarter.”

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Seven of the 10 biggest deals this year have been cobbled during the current quarter, Refinitiv data showed, underscoring the appetite for large-value transactions.

Hong Kong-listed animal feed producer CP Pokphand Co’s 28 billion yuan (US$4.1 billion) deal to entrench itself in the pork-related industry in mainland China ranked as the largest of them.

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