China Law Blog - China M&A: Can You Hear Me Now? - Comments

Micah

Dan — Wed, 27 Feb 2008 13:15:23 -0800

On a somewhat tenuously related note, I've been thinking recently about what will happen this year if/when the Enterprise Bankruptcy Law begins to apply to State-Owned Enterprises, as its supposed to. Will 2008 witness the first test case in which a creditor hauls an SOE into court? I wonder...

JT

Dan — Wed, 27 Feb 2008 13:15:23 -0800

So China's restrictions on foreign M&A are public and fair, but US restrictions on Chinese M&A (3Com) are racist? Hasn't the Chinese government marked out "telecommunications" as an area where M&A is verboten?

Twofish

Dan — Wed, 27 Feb 2008 13:15:23 -0800

I don't recall anyone in China getting too bothered about US restrictions on Huawei. My personal feeling is that some deal will go through, but it will be restructured a bit.

As far as law goes.... I'm surprised how often people confuse "there is no law in China" with "there is a law but it doesn't say what I think it should." In the case of foreign mergers and accquistions, the rules are quite clear on what companies can and can't do.

Eric Minto

Dan — Wed, 27 Feb 2008 13:15:23 -0800

I do not agree with Dickinsons perspective. China's laws as concerns FDI (and M&A) are governed by the Catalogue for the Guidance Foreign Investment in China, which specifically states what industries may be invested in 100% and which require a partner. Maybe Steve should read it sometime. China is directed in this matter by national policy not on a desire to rip off Anmericans or pass off their damaged goods, and it is naeive of you to suggest it is.

john

Dan — Wed, 27 Feb 2008 13:15:23 -0800

there are laws in china.but sometimes it doesn't seem to be enough in dealing with such M&As.the local goverments' interest sometimes is different from the central government.so they will interprete the rule in a style which will be totally different from the central government will do. when it occurs, there will leave to the parties involved a legal risk.

fatbrick

Dan — Wed, 27 Feb 2008 13:15:23 -0800

JT ,,

Do you ever understand the difference between minority and majority?

Pffefer

Dan — Wed, 27 Feb 2008 13:15:23 -0800

JT, the difference is the Chinese are not targeting any country particularly (foreign companies, whether it be American or Cambodian), the Americans are targeting particular countries like China (Chinese companies? No way whatsoever!). Plus, China made the do's and do not's of foreign acquisition pretty clear (as Dan's post has pointed out), the US has not.

Twofish

Dan — Wed, 27 Feb 2008 13:15:23 -0800

I wouldn't get too moralistic about mergers and acquisitions. Getting the required government approvals is part of the chess game that you have to play in any country.

In this case Bain and 3Com didn't quite do their homework, when faced with some junior congressmen opposed to the deal, they didn't react fast enough to either address their concerns or to organize a countergroup of congressmen in favor of the deal. This allowed the issue to get escalated up to John Dingell, and once you have the head of the House Commerce committee against the deal and no one in favor of it, the game was over.

Eric

Dan — Wed, 27 Feb 2008 13:15:23 -0800

Mr. Harris,

What is Chinese law concerning foreign, unsolicited tender offers for a majority stake in a publicly traded company (hostile takeovers), where the target corporation is not a "strong, successful" company? What about when the acquirer is a domestic firm?

Thanks.

steve

Dan — Wed, 27 Feb 2008 13:15:23 -0800

not so relevant to m&a, but an interesting china biz read none the less...

http://www.civic-exchange.org/eng/upload/files/200802_beyondPRD.pdf