M&A REGULATORY THREATS LOOM, FOREIGN INTEREST WANES

Greater regulatory oversight of foreign acquisitions of domestic firms has been written into the draft anti-monopoly law, according to China Daily. State media have warned that foreigners seeking to acquire Chinese firms will face tougher national security checks.

“Foreign mergers and acquisitions of domestic companies or foreign capital invested in domestic companies in other forms should be examined … if the cases are related to national security,” the newspaper quoted the draft law as saying. The draft law has been submitted to top legislators for a second reading.

According to a Pricewaterhouse Coopers report on July 17 2007, merger and acquisition (M&A) activity has continued to grow with the buoyant equity market, and domestic transaction volumes have increased rapidly. However, the source of this activity appears to be increasingly domestic.