China's Dealmakers Face Fresh Challenges

If anything, the new year has simply underlined the challenges facing Chinese dealmakers. The first week of 2018 saw two high-profile overseas acquisitions collapse, highlighting the completion risk that foreign sellers must grapple with when dealing with a Chinese buyer. 

The pressure of an increasingly stringent U.S. government approval process forced Chinese financial services giant Ant Financial to abandon a $1.2 billion purchase of MoneyGram International Inc., which would have been its largest overseas deal. Ant, backed by Alibaba Group Holding Ltd. co-founder Jack Ma, withdrew its offer after failing to get approval from a government panel that’s become more active in blocking Chinese investments. That’s despite Ma’s promise of creating a million U.S. jobs.

In a second blow to Chinese buyer credibility, HNA Group Co., one of the nation’s most famed acquirers, walked away from late-stage negotiations to purchase a stake in Hong Kong fund house Value Partners Group Ltd., people familiar with the matter said last week. The airlines-to-hotels-to-banking conglomerate, which spent more than $40 billion in a debt-fueled spending spree over the last two years, has now failed to complete at least four deals in the past six months.

Still, some other Chinese buyers are doubling down on their investments outside the U.S. Ride-hailing giant Didi Chuxing said last week it will buy Brazilian peer 99 Taxis, almost exactly a year after leading a $100 million funding round for the company.