Multinationals increase M&A activity

Sweden-based industrial group Sandvik AB displays its equipment at a coal and mining exhibition in Beijing. The company acquired an 80 percent stake in Shanghai Jianshe Luqiao Machinery Co Ltd in October 2011. Xu Xiaolin / For China Daily

Zhou Tiru, a Zero2IPO analyst, said that multinational companies are more interested in companies in areas such as machinery and manufacturing, medical care, as well as retail.

"During the first half of the year, there were eight acquisitions by foreign companies in the machinery and manufacturing sector, compared with two a year earlier," said Zhou.

Sweden-based industrial group Sandvik AB completed its acquisition of an 80 percent stake in Shanghai Jianshe Luqiao Machinery Co Ltd.

The move allows the Swedish company to enter China's middle-end construction machinery market.

"We are always looking for suitable local companies. You will see similar investments in China," said Anders Nyren, board chairman of Sandvik.

The company's average annual sales growth exceeded 25 percent from 2002 to 2011. It now has 65 offices and 15 manufacturing facilities around the country, with sales amounting to 7 billion yuan ($1.12 billion) last year.

US-based Zimmer Holdings, which mainly makes orthopedic devices, acquired Beijing Montagne Medical Equipment Co Ltd for 350 million yuan in 2010.

Sean O'Hara, managing director of emerging markets in the Asia-Pacific region for Zimmer, said that the company is actively exploring opportunities for external development that can add value to its current business.

"We anticipate there will be more mergers as the Chinese market gets larger and attracts further investment," he said.

In the retailing sector, Wal-Mart Stores Inc has recently signed an acquisition deal with Yihaodian to control 51.3 percent of a local e-commerce website, in a bid to boost its online sales in China.

Last year, Diageo Highland Holding BV, a United Kingdom-based premium-drinks maker, paid 140 million yuan to buy a 53 percent stake in Chinese liquor maker Sichuan Swellfun Co Ltd.

"We have been looking for suitable M&A targets around the world, including China. We aim to obtain brand resources and marketing access to realize business growth," said a source at the company, who wanted to remain anonymous.

The market potential in China is luring foreign operators as they try to expand their business portfolios, and provide more tailored products, technologies and services for local clients, said Zhou, the Zero2IPO analyst.

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