Is Dealmaking Getting Harder in China?

A new set of rules governing mergers and acquisitions in China could make it even more difficult for foreign companies to take stakes in the world’s fastest-growing, and toughest, market, The Financial Times’s Lex column argues. But that’s not to say there might not be some good as well.

Takeover deals in China keep hitting the brakes; aborted efforts include the Carlyle Group’s $375 million offer for Xugong Construction Machinery and various Goldman Sachs efforts. Now, new rules require more offers to go through the Ministry of Commerce. These include companies with prominent brands or those that may impact Chinese “economic security.”

Yet, the column notes, the new regulations also smooth out a previously woolly process that drew in many an uninformed ministry. And the rules now allow foreign all-stock mergers, which may prove to be the exception rather than the rule, but which also puts China ahead of Japan in terms of deal flexibility.