Transcript Slide 1

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welcome you to our webcast:
Riding the Chinese M&A wave in the U.S.
Introduction
Moderator:
Mary Kathleen Flynn
Senior Editor/Video Producer
The Deal LLC
REMINDER: Listeners will be in listen-only mode. We
encourage you to e-mail questions via the Q&A panel box to the
right of your screen. Select questions will be answered during the
last 10 minutes of the program.
We will be providing several poll questions throughout the
discussion. These questions will also appear in a panel box on the
right of your screen.
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EXPERT PANEL
Monish Bahl
Senior Vice President, Business
Development and M&A
CDC Corp.
Gene Ramirez
Managing Director
Morgan Joseph TriArtisan Inc.
Lance Gilliland
Managing Director
Tudor, Pickering, Holt, & Co.
EXPERT PANEL
Charles Comey
Partner
Morrison & Foerster LLP
Todson Page
Transaction Services Partner
PricewaterhouseCoopers
• China’s annual real GDP growth has averaged 9.9% from 1980 t0
2010, triple the worldwide rate of 3.3%
• The Chinese government has supported outbound M&A. The
China Development Bank, for example, has loaned $30 billion to
state-owned China National Petroleum Corp. for more overseas
M&A in energy resources
Source: Robert W. Baird Co.
What conditions are currently encouraging Chinesebased companies to pursue U.S. assets?
Values are stabilizing, with technology and energy sectors leading the way
VValue trends
CChina into U.S. - $ in millions
Healthcare
6%
$10,390
Materials
17%
$4,411 $4,402
$2,804
$1,609
2006
$1,189
2007
Financials
11%
2008
Consumer
Products
6%
2010
High
Technology
33%
Industrials
6%
2009
2010 Q1 11
VVolume trends
CChina into U.S. - No. of deals
19
Energy and
Power
22%
18
Fin an cials
12%
12
11
11
8
2006
2007
2008
2009
2010 Q1 11
En erg y and
Po wer
38%
Q1 ‘11
Hig h
Tech nology
37%
Co n sumer
Pro d ucts
6%
SSource: Thomson Reuters 4/15/2011
The coveted targeted sectors:
Energy and tech
• Computers and electronics has been the
leading outbound target sector over the past
10 years. Lenovo acquired IBM’s personalcomputer business for $1.75 billion in ’04.
• U.S. companies have become the most
frequent targets by Chinese firms. Firms
headquartered in the U.S. have accounted
for 18% of outbound targets since 2001.
Source: Robert W. Baird Co.
AUDIENCE SURVEY QUESTION:
What do you believe is the biggest factor driving
increased Chinese M&A activity in the U.S.?
A. Strength of the Chinese yuan vs. U.S. dollar
B. Strengthening of global economy
C. Increased demand in China for U.S.
products and services
D. Political and financial instability in other
global economies
E. Other
SELECT RECENT CHINESE ACQUISITIONS IN THE U.S.
Buyer
Target
Date
Amount
AVIC Automobile
Industry Holding Co.
Ltd.
China-based auto
manufacturer
51% of Nexteer
Automotive
April 9, 2011
$229.5 million
Aviation Industry Corp.
Cirrus Industries
U.S. aircraft maker
Feb. 28, 2011
$210 million
Tencent Holdings Ltd.
Riot Game Inc.
Los Angeles-based online
game developer
Feb. 4, 2011
$350 million
Cnooc International
Ltd.
33.3% stake of DenverJulesburg and Powder
River Basins project
Jan. 30, 2011
$570 million
U.S.- based automobile
manufacturer
Source: Morgan Joseph TriArtisan LLC
SELECT RECENT CHINESE ACQUISITIONS IN THE U.S.
Buyer
Target
Date
Amount
Industrial and
Commercial Bank of
China Ltd.
80% stake in Bank of
East Asia National
Association
Jan. 23, 2011
$140 million
LDK Solar Co. Ltd.
71.83% stake in Solar
Power Inc.
Jan. 6, 2010
$35 million
Nov. 28, 2010
$1.23 billion
California-based solar
company
China Huaneng Group
InterGen NV
U.S.- based provider of
power generation and fuel
management services
Source: Morgan Joseph TriArtisan LLC
Challenges for
China-based acquirers in the U.S.
Deal structure trends of Chinese
acquirers: Minority stakes and joint
ventures
AUDIENCE SURVEY QUESTION:
What effect do you believe increased Chinese M&A
activity will have on the pricing of U.S. acquisition
targets?
A. Greatly increased prices
B. Somewhat increased prices
C. None
D. Somewhat decreased prices
E. Greatly decreased prices
Attributes Chinese-based acquirers
bring to table besides capital
The effects of turmoil in the Middle
East and nuclear crisis in Japan on
Chinese acquirers in the U.S.
Closing remarks:
Outlook for Chinese acquirers in the
U.S.
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