In chaos lies opportunity. In the 10 months since Lehman imploded, Chinese bidders have announced 50 outbound offers worth $30m or more, according to Dealogic, totalling just over $50bn. Setting aside the almighty blooper of Chinalco’s thwarted approach to Rio Tinto, and Beijing Automotive’s failed bid for Opel, the success rate has been high. Just three deals have been withdrawn, and one of those – Minmetals’ bid for Oz Minerals – was resurrected in an acceptable form. Twenty-four deals worth a combined $17bn have been completed; 21, worth almost $18bn, are pending.
Rio seems to have served as a lesson. That huge, multi-layered confection was a gift to overseas opponents, both political and commercial. Since then, the focus has stayed constant: more than two-thirds of offers have been in mining or energy. Deals have also been smaller and simpler. China’s bidders have sensed that important long-term concessions can be extracted by degrees. And acquirers have done better by steering clear of prickly, developed economies: targets there account for 54 per cent of the deals, but all the failures. Finally, the legacy of CNOOC’s failed hostile bid for California-based Unocal lives on. Just one deal – the swoop on 1.1 per cent of Diageo’s shares – seems to have been unsolicited.
It is notable, too, that very few of these deals were contested, at least publicly. Now that foreign companies – and their supporting cast of banks – are recovering poise, China Inc may encounter stiffer opposition. That may explain the recent escalation: the flurry at the end of last week included moves on Nufarm, Australia’s biggest supplier of farm chemicals, and Metals X, the country’s only tin miner. Still, an effective win/loss ratio of 8:1 is not to be sniffed at.
