Cross-border M&A Uptrend Continues into Q3 with Value Totaling US$9.10B; Energy Sector...

Cross-border M&A Uptrend Continues into Q3 with Value Totaling US$9.10B;
Energy Sector Stands Out in Value; Bio/healthcare and TMT Remain Active

BEIJING, Oct. 23 /Xinhua-PRNewswire/ -- Zero2IPO Research Center -- the
research arm of Zero2IPO Group -- recently published its "China Merger &
Acquisition Report Q3 2008." According to the report, 30 transactions were
closed in TMT, Bio/healthcare and Energy, 17 of which disclosed a value of
US$5.23B. In addition, there were 20 cross-border deals, 14 of which disclosed
a value of US$9.10B.
The report also summarizes the highlights of the Chinese M&A market during
Q3'08:
Despite Economic Decline, Cross-border M&As Increase in Number with Energy
Sector in the Spotlight
In spite of the domestic and overseas macroeconomic factors, the Chinese
market has still seen an increase in the number of cross-border acquisitions
and mergers during the third quarter of 2008. A total of 20 cross-border deals
were finalized this quarter. Fourteen of these deals disclosed approximately
US$9.10B, an increase of 453.1% over Q3'07. Notably, 11 of these deals (55.0%
of the total) were launched by domestic enterprises; the value created by the
11 deals represented 70.5% of the total value disclosed in Q3'08. By
breakdown,
large-size M&As were mainly concentrated on Oil, Coal and other
resources-related sectors.
Table 1: Distribution of Cross-border Transactions by Quarter (1)

Total Deals Total Average
Deals With Disclosed Value Value
Value (US$M) (US$M)
2006Q1 12 9 1,091.95 121.33
2006Q2 9 4 998.45 249.61
2006Q3 23 14 2,477.55 176.97
2006Q4 26 16 4,521.02 282.56
2007Q1 15 10 1,036.96 103.70
2007Q2 19 15 2,127.59 141.84
2007Q3 18 9 1,645.67 182.85
2007Q4 32 29 13,858.89 477.89
2008Q1 10 5 253.14 50.63
2008Q2 19 9 1,150.50 127.83
2008Q3 20 14 9,102.34 650.17

Source: Zero2IPO Research Center

(1) Note:
1. In Cross-border M&As, either the target company or the acquirer is a
Mainland China-based company.
2. Total value refers to the total disclosed value for the deals that
disclosed value during a given period.
3. Average value refers to the mean of "Total value."

Figure 1: Distribution of Cross-border Transactions by Quarter (US$M)
(Please Click the Link in the bottom of the release)

Energy M&As Hit a Historic High; TMT and Bio/healthcare Remain Active

Figure 2: M&As in TMT by Quarter
(Please Click the Link in the bottom of the release)

The Zero2IPO Research Center focuses heavily on the TMT, Energy and
Bio/healthcare sectors. Of these three sectors, TMT was still the most active
with 15 deals closed. Among them, one third of the deals disclosed an
approximate value of US$238.61M and averaged US$47.72M. This quarter, with the
exception of two deals, the remaining TMT M&As (13, to be exact) were all
concentrated on Internet and Software sub-sectors. In addition, Bio/healthcare
remained relatively active with eight deals closed, six of which disclosed a
value of US$199.25M and averaged US$33.21M. In the Energy sector, seven deals
were finalized. The disclosed value (US$4.79B by six deals) is a record high,
with an average value being US$797.98M.
Table 2: Industrial Distribution of M&As (by Target)

Total Deals Total Average
Deals with Value Value
Value Value Disclosed (US$M) (US$M)
Value Value Value
TMT 15 5 238.61 47.72
Bio/healthcare 8 6 199.25 33.21
Energy 7 6 4,787.87 797.98
Total 30 17 5,225.73 307.40

Source: Zero2IPO Research Center

VC/PE-related M&As Create Historic High in Value

Seven of the VC/PE-related M&As Zero2IPO analyzed were closed this
quarter.
Of these transactions, three closed in Traditional and four in Broad IT. The
high M&A value of VC/PE-related transactions is mainly due to the Coca Cola
Group planning to acquire Huiyuan Juice, which has been invested by Warburg
Pincus and other investors, with a bidding offer price of US$2.303 billion.
The acquisition is subject to the approval of Chinese regulatory organs,
inclusive of the Ministry of Commerce of PRC.
Table 3: Industrial Distribution of VC/PE-related M&As

Sector Total Deals Total Average
Disclosed Deals with Value Value
Value Disclosed Disclosed (US$M) (US$M)
Value Value
Traditional 3 3 2,312.36 770.79
Broad IT 4 3 97.47 32.49
Total 7 6 2,409.83 401.64

Source: Zero2IPO Research Center

Note: The research scope of Zero2IPO Research Center covers:

a. At least one party involved in the deal is a Mainland-based company.
Here "party" refers to either a target company or an acquirer
b. Deals where acquirers take 20% or above of the target companies' stake
c. The research scope of Zero2IPO Research Center covers:
(1) M&A activities in TMT, Bio/Healthcare and Energy sectors,
(2) Cross-border M&A transactions
(3) VC/PE-related M&A transactions

An equity transaction is included into our M&A research scope if it is
between two enterprises and both of them are non-financial investors, with at
least one party invested by a VC/PE. For transactions between two parties
where at least one party is VC/PE are categorized into VC/PE research field.
For more information please click:
http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=7531

About Zero2IPO Research Center
Founded in November 2001, the Zero2IPO Research Center provides a full
range of business research reports and customized research solutions for
investment professionals in the Greater China Region. Our research ranges from
Venture Capital, Private Equity, IPO, M&A to TMT industries. The Zero2IPO
Research Center sets itself apart from competitors as the most prestigious
research institute in the Chinese VC and PE spheres.
SOURCE Zero2IPO

Ms. Robin Zhu, Zero2IPO, +86-10-8458-0476, Robinzhu@zero2ipo.com.cn, or Nicole
Meng, Suite 1203, Tower A, Eagle Plaza, No. 26, Xiaoyun Road, Chaoyang
District, Beijing, 100125, China, nicolemeng@zero2ipo.com.cn