After Trump took office, the trend of American economic protectionism continued to rise, adding another typical case.
As a well-known financial technology company, Ant Financial is not a state-owned company in China. Although it is a high-tech industry and does not involve any sensitive areas, it is still banned by the famous American economic protectionist front-stage performer, the Committee on Foreign Investment (CFIUS).
According to the reporter's understanding from overseas channels, in the past year, Ant Financial has made at least three data submissions and 1 price increase for this transaction, but it has not been approved yet.
In the past, M&A transactions blocked by the Foreign Investment Committee either involved that the acquirer was a state-owned enterprise or that the acquired company belonged to a sensitive industry or possessed sensitive technology. However, more and more cases show that American economic protectionism has reached a new peak under the leadership of the new President Trump.
The "beater" of American protectionism
This Committee on Foreign Investment in the United States, which belongs to the United States Treasury Department, is no stranger. When China's acquisition of American companies was blocked many times, it acted as an executor.
The institution was established after the collapse of the Bretton Woods system in 1975, when the dollar depreciated and foreign capital began to enter the United States frequently. However, at the beginning of its establishment, the agency did not clearly regulate and prohibit foreign investment that caused hidden dangers to US national security. Because of this, this institution was described at that time as "one of many ambiguous and toothless inter-departmental institutions in Washington".
In the 1980s, Japanese capital began to enter the United States for acquisitions, and the United States gave the Committee on Foreign Investment real power, which had the right to judge whether the acquisition proposal in the United States harmed the national security interests of the United States.
In recent years, Chinese enterprises have become more and more familiar with the Committee on Foreign Investment in the United States, because they can often see the news that the organization vetoed Chinese acquisitions. It should be said that the organization has stricter auditing standards for acquisitions from China. In the review of the Committee on Foreign Investment in the United States, China is the country with the largest number of reviews in recent years.
▲ Image source: 2 1 Century Business Herald
From the words of Alex Holmes, CEO of the acquired company MoneyMoney, it seems that we can also see the "colored glasses" brought by this institution to the merger of China companies. Alex Holmes said frankly in a press release: "The geopolitical environment has changed a lot since we first announced the proposed transaction with Ant Financial a year ago. Although we do our best to cooperate with the US government, it is now clear that CFIUS will not approve this merger. "
Trump's protectionism continues to rise.
The blocking of the acquisition of Ant Financial Services once again proves that the United States is moving towards conservatism, especially in the face of investment from China, the review is more stringent.
The survey of M&A industry in science and technology released by Meifu Law Firm, headquartered in San Francisco, USA, in June 5438+ 10 last year showed that the Trump administration had revised its trade policies and priorities, and since then, the Committee on Foreign Investment in the United States has been more willing to intervene in foreign M&A transactions, which is affecting transnational transactions.
In fact, the protectionist sentiment in the United States has warmed up before Trump took office. According to the Financial Times, in 20 16, 10 American M&A transactions worth $59 billion were cancelled, equivalent to nearly 80% of the total cancellation amount ($75 billion).
▲ US Secretary of Commerce Ross
Some M&A assets are not owned by American companies, but they are still blocked. For example, a China consortium tried to buy the lighting equipment division of Philips in the United States for $3 billion, but it was blocked by the Committee on Foreign Investment.
China Fujian Hong Xin Investment Fund's acquisition of Aixtron, a German chip maker, has been approved by the German government, because the company's assets in the United States are also being acquired, which is actually banned by the United States on the grounds of "information security".
In 20 17, when Trump came to power, it was not uncommon for China Capital to be delayed or suspended by the US censorship, including: China Huaxin Energy invested $275 million in Cowen, a boutique investment bank in new york, and China Oceanwide announced the acquisition of Genworth Financial20 16 and $2.7 billion in 12. Chinese private equity fund Canyon Bridge acquired American semiconductor manufacturer Lattice and other transactions.
China companies have been subjected to "special" treatment.
According to the Financial Times, in 20 16, the total amount of overseas transactions cancelled by China exceeded $75 billion, and more than 30 acquisitions by European and American enterprises were forced to "abort" due to regulatory and foreign exchange restrictions. In 20 15 years, the amount of cancelled transactions was only about 10 billion dollars.
There used to be a conspiracy theory that China companies bought high-tech overseas "in an organized and selective way". This is also an important factor used by many government regulators to review the acquisition of China companies.
Due to frequent rejection cases, overseas acquisitions of China Capital also declined. According to the survey data provided by Thomson Reuters, the scale of China M&A in the United States dropped sharply in 20 17. By the end of 2010/0, the disclosed scale of China M&A in the United States was13.88 billion US dollars, compared with 60 million US dollars in the same period of 20 16.
However, as a direct result of China's reduction in overseas investment, the valuation of some target companies has also dropped a lot because there is no China company involved in the acquisition, which makes some companies complain.
After Aixtron's takeover was rejected, ArgonautCapital, its largest shareholder and London-based investment company, issued a statement denouncing the absurdity of the United States' refusal to buy.
▲ Ai Siqiang Germany Headquarters Building
Due to the long-term high-speed growth of China's economy, it is natural for China capital to acquire assets overseas to seek the rapid development of the company, which is also the main factor for the sharp increase in the scale of overseas mergers and acquisitions of China enterprises in recent years. However, many European and American countries also pay special attention to China's capital, frequently blocking the acquisition of domestic assets.
In fact, China has the largest consumer market and the best economic vitality in the world, a sound industrial system and sound basic charity. Any company wants to enter the China market, and China is the biggest attraction for both products and technology applications. However, after being censored, many companies lost the help of China Capital and China's huge consumer market.
Time will prove that many companies in countries with strict auditing will miss the opportunity to connect with China's capital and market, and they will become losers. A professional investor who has long been concerned about overseas mergers and acquisitions said.
America is scared, too.