By Angus Mcneice in London
Germany leads with 34 deals
E-commerce, financial services, high-tech companies attract investors
Chinese dealmakers have completed 170 European acquisitions worth $90 billion so far this year, according to analysis by UK business advisory firm Deloitte.
That is 40 percent up on 2015 when 122 deals were finalized. Deloitte’s analysis, which covers the period to Nov 22, did not include last month’s announcement that Chinese online travel company Ctrip is buying UK-based travel search company Skyscanner for $1.75 billion.
Including the Skyscanner deal, acquisitions in 2016 were worth $90.35 billion.
“I think there’s a strong view from Chinese business that they need to internationalize, with less reliance purely on domestic markets,” said Angus Knowles-Cutler, China Services Group chairman for Deloitte.
“Skyscanner is the classic kind of deal that ticks most of the boxes,” he told China Daily. “It’s the Chinese buying an e-commerce business in the UK, with strong management that it will leave in place and that serves a Chinese middle class that spends money on travel.”
Deloitte found that Germany attracted the biggest number of acquisitions by Chinese companies, with 34 deals. The UK was second with 32, then France with 21.
The average disclosed deal value was $900 million, or $350 million if the mega-deal involving ChemChina’s $43 billion takeover of Swiss pesticides and seeds group Syngenta, which is still subject to regulatory approval, is excluded.
Chinese companies looked mainly to the UK to acquire stakes in financial services and the leisure industry, in particular hotels and football clubs, while they looked to Germany to invest in high-tech manufacturing.
Knowles-Cutler predicted a strong 2017 in terms of investment, with increased emphasis on e-commerce. He said that the UK referendum vote to leave the European Union has not acted as a deterrent among Chinese investors.
“I’ve spoken to about 25 major Chinese businesses over the last couple of months since Brexit,” he said. “I would say overall there’s a net positive among Chinese businesses about Brexit. Sterling has depreciated in value, assets and investment opportunities are cheaper for investors.”
Knowles-Cutler said that Chinese investors will be looking for reassurances from the UK government that the “Golden Era” of relations with China, inaugurated by former Prime Minister David Cameron and President Xi Jinping, will move forward.
“I think they are positive about the new government’s attitudes toward China,” he said. “They took great heart from the last prime minister’s agreement on the Golden Era and they’ll be looking to see if that attitude is going to continue.”
The number of Chinese deals in Europe this year massively outdoes the 52 deals with disclosed deal value of $8.2 billion which were achieved by European acquirers in China.
Source of the article
China’s Ctrip is buying flight search company Skyscanner for $1.74 billion
Skyscanner, the Scotland-based flight-search company, has been acquired by Chinese online travel giant Ctrip for £1.4 billion, or approximately $1.74 billion.
The deal is predominantly cash and is expected to close before the end of this year. Once completed, Skyscanner will operate independently of Ctrip, both parties confirmed.
Ctrip was founded in 1999, and it is China’s largest online travel firm. Its revenue for Q3 2016, which was announced today, came in at RMB 5.6 billion ($810 million), that’s up 75 percent year-on-year, with a slim $4 million net profit. Ctrip recently raised close to $1 billion from the sale of convertible notes, a raise that looks to be coordinated with the Skyscanner deal.
This news comes less than a year after Skyscanner, which has over 700 staff across 10 offices, raised $192 million in funding in January 2016 to expand its reach worldwide. That was the company’s first financing in more than two years, and investors included Khazanah Nasional Berhad, the Malaysian government’s strategic investment fund, Yahoo Japan, fund manager Artemis, investment firm Baillie Gifford and PE firm Vitruvian Partners. Sequoia is an existing backer.
The round valued Skyscanner at a reported $1.6 billion. The company was widely-expected to pursue an IPO in 2017, which made its acquisition somewhat surprisingly while the price isn’t a huge leap on that previous valuation. Skyscanner had seen its revenue growth slow, as Skift reported, but the company put that down to increased investment in product rather than marketing.
Regardless, this is the largest travel tech acquisition in Europe to date. Skyscanner placed much emphasis on Asia — partnering with Yahoo Japan and acquiring China-based travel search startup Youbibi — but the deal promises to help Ctrip expand its business into international markets.
“Skyscanner will complement our positioning at a global scale and Ctrip will leverage our experience, technology and booking capabilities to Skyscanner’s,” Ctrip co-founder and executive chairman James Jianzhang Liang said in a statement.
In a video statement, Skycanner CEO and co-founder Gareth Williams said that the deal would enable his company to gain access to greater resources to make travel “simpler:”
It’s been a busy past year or so for Ctrip, which has pursued M&A activity to expand. More than a year has passed since it agreed to a share swap with arch rival Qunar, which saw it gain a 45 percent voting interest in Qunar in exchange for 25 percent of the Ctrip business.
In January of this year, Ctrip spent $180 million to buy around one-quarter of India’s MakeMyTrip, while it splurged $463 million this summer to get a slice of China Eastern Airlines, a state-run airline that claims 94 million passengers.
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