China mulls panel to scan foreigners’ acquisitions

BEIJING/WASHINGTON: China plans to create a ministerial panel to review takeovers of local companies by foreign investors. The panel will be led by the National Development and Reform Commission and the Ministry of Commerce and will be overseen by the State Council, according to a statement published today on the council's website.

Coming under scrutiny will be acquisitions involving military industrial companies and others relating to national defence, the statement said. It also will look at takeovers involving producers of agricultural goods, energy and natural resources, as well as companies in some parts of the infrastructure and transportation-services industries.

"Now foreign-funded M&A in China would be subject to review by a state-level investment-review authority and can be blocked on the ground of endangering national security, which may not be received favorably by international investors," said Hubert Tse, a Shanghai-based partner at law firm Boss & Young.

Takeovers of companies in Brazil, Russia, India and China, surged almost 80 per cent last year and account for a record 22 per cent of the $2.23 trillion of transactions worldwide, according to data compiled by Bloomberg.

Acquirers from BRIC nations announced $402 billion of takeovers, a 74 per cent increase from 2009 and more than quadruple five years earlier, the data show. In 2011, China has accounted for 278 transactions valued at $9.1 billion, compared with $19.6 billion for the Asia-Pacific region and $229.4 billion globally, according to Bloomberg data.

In 2009, the Chinese government blocked Coca-Cola Co.'s planned purchase of China Huiyuan Juice Group Ltd., which would have been the biggest foreign takeover of a Chinese company. The commerce ministry said competition would have been hurt by Coca- Cola's control over China's juice and beverage market.