China Eases Rules for Companies to Complete Smaller Overseas Acquisitions

Get ready for China's companies to come calling and trying to buy your company. It will now be easier for them to complete small overseas acquisitions following new rules that took effect May 8.

 

The Wall Street Journal reports that only deals valued at more than US$1 billion will require a full review by the National Development and Reform Commission (NDRC).

 

"Previously, any deal valued at more than US$100 million needed to be submitted for the NDRC's approval, a process that could take months The likelihood of long delays created uncertainty during negotiations with foreign sellers, putting Chinese bidders at a competitive disadvantage versus those from other countries," wrote the Journal.

 

Under the new rules, Chinese companies must still inform the NDRC or provincial government—depending on the  exact size of the deal—about acquisitions valued at under US$1 billion, but the review is limited to seven days.

 

Most overseas acquisitions by Chinese companies fall under the US$1 billion threshold, Lian Lian, co-head of North Asia M&A for J.P. Morgan told the Journal. In fact, 93 of the 104 outbound acquisitions announced so far this year were under US$1 billion, according to J.P. Morgan data obtained by the Journal.

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