Chinese investors are gobbling up US companies at a historic rate
(Reuters/Andrew Kelly)
Matt Stonie consumes hot dogs during the annual Fourth of July 2015 Nathan's Famous Hot Dog Eating Contest.
While dealmaking has been sluggish to start 2016, there's one class of investor making huge waves.
According to Andrew Birstingl at FactSet, the number of Chinese firms taking over US companies is skyrocketing.
"Chinese companies pursuing firms based in the United States isn’t a new trend in the M&A space, but it looks to be a growing one," wrote Birstingl in a note Tuesday. " In the first three months of 2016, there were 17 transactions announced in which a Chinese acquirer purchased a US target. This marked the largest transaction count of this deal type in the first three months of a year on record."
Additionally, Birstingl noted, the value of deals made just in the past 3 months already eclipses the total for all of 2015. So far $28.8 billion worth of deals has been announced in 2016, versus $5.7 billion total for last year.
Birstingl said that much of the focus has been on the semiconductor industry, which produces parts for cell phones and other technologies.
(Factset)
Not only have Chinese companies come after US businesses, they have also targeted other non-Chinese investments.
"2015 marked the largest year for Chinese acquirers taking over global targets (non-Chinese targets) both in terms of aggregate transaction value of these deals ($105.8 billion) and the number of transactions (364 deals)," said Birstingl. "In the first three months of 2016, cross border deals with a China-based acquirer amounted to 80 transactions and summed to $80 billion in total transaction value."
Birstingl concluded that due to China's slowing economic growth, this trend will probably continue as Chinese firms look for more profitable possibilities outside the country's borders.
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