Even though unsolicited offers are relatively uncommon in the world of big mergers and acquisitions, an increasing number of Chinese companies have been reaching out to foreign entities.
Since the beginning of this year, 13 Chinese companies have made a total $78 billion worth of unsolicited offers to overseas targets, according to the Wall Street Journal citing data from Dealogic, a data provider. Compare that to 2015, where Chinese makers made a record 17 offers worth over $20 billion. The latest outreach involves electronic appliance maker Midea Group’s unsolicited $5 billion offer for German robotics company Kuka AG.
The value of the unsolicited offers accounted for a large proportion of China’s total outbound M&As in the first five months of the year, which had reached a new high of $119 billion.
Often, such unsolicited offers are unsuccessful since Chinese companies have not completed similar deals, nor are they familiar with the necessary documentation typically expected by an overseas company.
In other cases, Chinese companies are often off the radar from U.S. or European bankers looking to shop the target company around, even though they are willing to pay a big premium. According to Dealogic, almost half of the unsolicited offers made by Chinese companies over the past five years have failed.