Headwinds may have buffeted China’s economy in 2014, but the best deals took flight nonetheless, pushed aloft by the ingenuity of the law firms supporting them. Leo Long reports on those that separated themselves from the rest of the field
This was the year when tech truly moved to the fore, when Hong Kong cemented its unique offshore status and outbound activity accelerated to levels previously unseen. On the domestic front, look no further than Alibaba Group’s investment in Youku Tudou and JD.com’s partnership with Tencent to fathom the enthusiasm for this sector.
Alibaba’s US$1.22 billion acquisition of a 16.5% stake in Youku Tudou was one of the high-profile M&A deals of the year, which enabled Alibaba to accelerate its digital entertainment and video content strategy, while JD.com and Tencent’s multibillion-dollar partnership stretched the law firms involved on all aspects of M&A, antitrust and technology, media and telecoms (TMT) across several jurisdictions.
While on Alibaba, of course its $25 billion IPO on the New York Stock Exchange (NYSE) also ranks as a landmark deal. The largest IPO in financial history, smashing all records for a Chinese company listing in any market. Little more need be said. JD.com’s NASDAQ IPO also rates, while in overseas M&A the difficulties faced by Chinese companies in the tech sector were exemplified in Lenovo’s acquisition of IBM’s x86 server business. Stringent antitrust reviews and various moves by the US government raised questions that will likely continue to burden Chinese companies, given the cybersecurity concerns affecting the US-China relationship.
Other sectors also featured. COFCO’s acquisition of Noble Agri for US$1.5 billion represented the largest outbound acquisition so far in the food sector by a Chinese state-owned enterprise (SOE). Assisting law firms enabled Noble Agri to become the principal international origination platform for COFCO, with its upstream trading operations linked to the downstream processing and distribution capabilities of COFCO in China, creating a fully integrated value chain. Dongfeng’s equity investment in PSA Peugeot Citroen Group and was the biggest offshore acquisition for a Chinese SOE in the automobile industry and the largest investment by a Chinese company into France to date.
Hong Kong remained the destination of choice for China’s IPOs. Of note was China Cinda’s IPO on the Hong Kong Stock Exchange (HKEx). The inclusion of a calculated value report in an IPO prospectus was unprecedented, and this was the first state-owned Chinese asset management company to list in Hong Kong.
CITIC Group’s Hong Kong IPO, valued at US$37 billion, marked this massive transaction as a transformation of super-giant state-owned enterprises, while Bank of China’s issuance and listing of offshore preference shares was, among other things, the first Basel III compliant additional Tier 1 capital issuance by a PRC bank, and the first preference share issuance by a PRC company.
In antitrust, look no further than the GSK commercial bribery cases for a whiff of the future, while a low-value IP case win involving John Deere’s colour combination trademark infringement may also signal long-awaited changes in this sector.
The winning deals have, as in previous years, been chosen based on a number of factors, not just large monetary values. The overall significance, complexity and innovative nature of the deals were also considered, as well as the deal size and broader interests.
China Business Law Journal’s independent editorial team made its own choices on the deals that we felt were flying ahead of the field for the year. All winning deals and law firms chosen are listed in alphabetical order to avoid presumptions of ranking.