Research Team at Nomura, suggests that the CNY net pending M&A outflows surged 80% to -$87bn in February, and currently are just shy of EUR outflows (-$88bn), which also slightly increased.
Key Quotes
“Much of this is explained by the announcement of China Chem’s $44bn cash purchase of Syngenta AG, a Swiss provider of biotechnology and genomic research services. According to Dealogic, the deal is still subject to approval of Syngenta shareholders, as well as antitrust and other regulatory approvals.
Other deals contributing to CNY M&A outflows include Tianjin Tianhai Investment Co.’s $6.1bn purchase of Ingram Micro Inc., China Life Insurance Co.’s $3.6bn acquisition of China Guangfa Bank Co. (with US Citigroup and IBM as the target’s ultimate parent), and Beijing Enterprises Group’s $1.6bn acquisition of the Danish EEW Energy from Waste GmbH.
Net pending cash flows for the US were largely unchanged at $112bn in February (up $1bn from January, though still below the levels seen in Q4 2015. As stated before, the US pipeline may be deceptively high because of the large SABMiller Anheuser Busch inBev (ABI) deal, with EUR outflows similarly affected. Supporting the USD inflow pipeline this month was Mylan NV’s $5.7bn purchase of Swedish Meda AB (pharmaceuticals), and Dynegy Inc. & Energy Capital Partners’ $3.3bn purchase of a French-owned power plant in North America.
Net JPY outflows from M&A activities remained weak, staying around the smallest since January 2015. Despite two sizable outflow deals at $3.8bn, there was a large inflow from Taiwanese Hon Hai acquiring Sharp ($5.3bn). However, it is worth noting that Dealogic reported that Hon Hai is delaying the signing of an agreement.
In summary, EUR, CNY, CAD and JPY all have negative expected cash flows from net pending M&A activity, with EUR the most negative (while still likely overstated by the ABI deal by $70.2bn), followed by CNY, CAD and JPY.”
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