Asia's leading M&A practitioners gathered in the opulence of Hong Kong's Island Shangri-La hotel on January 31 and February 1 for IFLR's annual M&A Asia forum. The event, which was chaired by Inter Pacific Bar Association's Wilson Chu, was sponsored by Sidley Austin, Kim & Chang and Wong Partnership. Spirits were high throughout the two days – there was no doubt that both private practitioners and in-house counsel involved with M&A in Asia have had an excellent year.
On the panel Special Considerations in M&A-Related Litigation in Asia, Cedric Chao, partner at Morrison & Foerster in San Francisco, led a team of both private practice and in-house specialists through the perils of dispute resolution. Chao highlighted that one third of M&A deals ends in dispute or misunderstanding. Though not always leading to arbitration, it was a subject that needed closer attention.
As court systems in Asia have become more transparent and professional, the speakers were asked for their first hand preferences for litigation courts. Sara Yang Bosco, general counsel Asia Pacific at Emerson Electric, noted that it was only in Hong Kong that the company would consider litigation, stemming from confidence in the jurisdiction's rule of law and history. China is not yet viewed as transparent enough. Singapore, though, was seen by many as the prime arbitration location, having the edge over Hong Kong because of its total independence from mainland China.
The relative merits of mediation provisions were also examined. Although 30 days spent in the same room as the person responsible for your grievances can seem a burden, the panelists agreed that they could bring about positive results. They argued that complex disputes that can't always be settled with payments, such as long term joint ventures, could sometimes be settled between CEOs alone. The anonymity of relationships in purely commercial disputes, like the sale of equity, would not bring such positive results.
Sara Yang Bosco explained that one of the main challenges faced by in-house counsel in the pre-acquisition stages of a takeover was dealing with the founder of the target company. Often the innovator behind the project, they are usually unwilling to rescind control and look for a prominent role within the new project. The founder rarely gets such a role, especially on the finance side, and there are often issues of protecting the company from the actions of the disgruntled founder once this has become apparent.
Elsewhere, China's pre-eminence meant that it was never far from delegate's minds in the two day event. The focus was on the PRC's increase of outbound, as well as inbound M&A activity. Roger Denny, partner and head of M&A at Clifford Chance Asia, started in cautionary fashion. He explained that despite the excitement and positive early signs, Chinese outbound M&A would not forge ahead in the same manner as inbound investments have. He cited the greater knowledge that potential Chinese outbound investors have in their own home market, a market that is growing faster than any other, as a distracting influence away from outbound activity. Denny also spoke of protectionism, and the (perhaps irrational) fear that PRC companies may have, following Cnooc's failed acquisition of Unocal.
Talk of protectionism led to a detailed look at the new Chinese M&A regulations from a stellar line up of speakers, including Kirk Tong, partner at Jun He Law Offices in Beijing, Constance Choy, partner at Sidley Austin in Hong Kong and Kiang Kok Teo, partner at Shook Lin & Bok, Singapore. They analyzed what the regulations said, as well as what they didn't say, and offered an in-the-trench perspective on other practical developments in China.
Constance Choy focused on the anti-trust perspective from article 53 of the regulations. It will, she said, affect foreign interests in domestic companies in China. The lack of clear definitions on what constitutes a "domestic company" has left investors second guessing whether they are domestically listed, or do not have any foreign interest.
The range of topics and speakers was varied. The panel Hedge Fund Activism in Asian M&A examined the tactics of investor activism developed in the US, and looked at ways to tackle these challenges as they swept into Asia. David Katz, partner at Wachtell Lipton Rosen & Katz in New York and Jong Koo Park, partner at Kim & Chang, Seoul gave insightful perspectives from both the US and Asia.
Reserve your place at IFLR's 2008 M&A Forum now!