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August 10, 2017 at 10:41 AM
It appears the protectionist tide has officially turned on China’s offshore buying binge. Under Donald Trump’s administration, Chinese acquisitions of U.S. companies and those elsewhere are getting knocked back at an alarming rate. No wonder the outlook for M&A bankers looks bleak.
(Related: New York Regulators Look Over Genworth Buyer)
While Beijing’s crackdown on debt-fueled conglomerates is a few months old, the U.S. push back is just heating up. It could be that China National Chemical Corp.’s $43 billion takeover of Syngenta AG is one of the few mega-transactions that gets the green light this year. Mainland bids for the Chicago Stock Exchange and Cleveland’s Aleris Corp. look shaky and may join HNA Group Co.’s $416 million tilt at a North American in-flight entertainment provider on the scrap heap.
The U.S. Securities and Exchange Commission this week delayed a decision on whether to approve the China-led purchase of the Chicago Stock Exchange. It’s indicative of the tightened scrutiny by U.S. regulators for several reasons. For one, SEC Chairman Jay Clayton overrode his staff’s recommendation to proceed with the sale, even though at $27 million, it’s tiny; and two, that was despite the Committee on Foreign Investment in the U.S., or CFIUS, giving it the go-ahead in December.
U.S. aluminum-product maker Aleris also looks unlikely to change hands. Aleris and Zhongwang USA LLC withdrew a notice seeking approval of the transaction from CFIUS, with Aleris saying in a filing Wednesday there can be “no assurance” the deal will be approved, leaving it in limbo. With Zhongwang’s parent under investigation by the Commerce Department for shipping metal through third countries to avoid U.S. import tariffs, any chance of success seems slim.
Those setbacks threaten to imperil other deals that are awaiting CFIUS’s good graces. They include: Alibaba Group Holding Ltd. affiliate Ant Financial’s purchase of MoneyGram International Inc., which has been refiled once already; China Oceanwide Holdings Ltd.’s bid for insurer Genworth Financial Inc.; China-backed Canyon Bridge Capital Partners Inc.’s $1.3 billion offer for U.S. chipmaker Lattice Semiconductor Corp. (both of those have already refiled twice); and last but not least, Anthony Scaramucci’s plan to sell his stake in SkyBridge Capital to HNA.
