China resource deals still hot

September 1, 2009

Investment bankers have been saying that there are only two
things you need to know when it comes to Asia M&As — China and
resources.

Is this still the case after Rio Tinto walked away from
Chinalco’s $19 billion proposal earlier this year?

A noticeable rise has been seen over the last 12 to 18 months
in China-related mergers and acquisitions, particularly Chinese
firms moving on overseas targets, Philip Partnow, a senior banker
with UBS Securities, said at the Reuters China Investment Summit.

“My personal view is it’s a very interesting and exciting
area,” said Partnow, deputy head of UBS’s investment banking
department in China. “There’s a lot of activity.”

But areas outside of resources were not as clear.

“It was rather unexpected to see a company that isn’t really
involved in automobile manufacture going out to acquire a
business like Hummer,” Partnow said, referring to little-known
Chinese heavy machinery maker Tengzhong, and its surprising bid
for General Motors’ Hummer brand.

Compared to automobiles, the resources sector is relatively
straightforward, said the banker.

“You don’t have to figure out what kind of coal people want
to drive to work in the morning,” he said.

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