After over a year of picking through distressed opportunities, M&A is resurgent. As speakers at IFLR’s M&A Forum revealed, there are attractive targets in sectors and jurisdictions across Asia. But regulatory gaps remain. Panellists pointed out areas for improvement and helped delegates navigate their way through M&A activity in the region.
Here are some of the highlights:
“There is a bias in the judicial system regarding takeovers. This is born out of the paternalistic need to protect small shareholders.” Ben Jenkins, senior managing director at The Blackstone Group, on PCCW and the difficulty of doing take-privates in Hong Kong
“We closed a deal last week where there were three critical issues at 3 am and we were due to close at 9 am. The CEOs decide to sign without checking that the transaction lawyers have finished.”
Bharat Vasani, general counsel of Tata, reveals deal realities in India
“Drafting legal opinions in Indonesia is an art form. If you’re dealing with lawyers of banks that are just ticking boxes, that doesn’t help. You want to know what’s really going to happen.”
Hilton King, general counsel, Indonesia of Sampoerna Strategic, discusses the certainty of legal opinions in the country
“When doing a Pipe, you need to go to your limited partners and explain why it is a good story and how you plan to get the value added. Otherwise it’s difficult to justify the 2/20 fee structure as investors can just pick up the phone and buy that company’s shares.” Wayne Bannon, general counsel, Asia with Carlyle Group, recommends talking to LPs about Pipes
“There are 30 Indian diamond traders in prison in China right now. They went there to seek their fortune. And because of a tiny quirk and the decision of a particular tax official, they were classified as smugglers. I think it’s fair to say we have a different approach to the law.”
Kaushal Kumar Sharma, director general at the Competition Commission of India, defends the competition authorities in India
“Chinese companies are a lot more open to break fees than they were three years ago. Then, there was no way they would get comfortable. But now it establishes the credibility of both parties and the intention to complete the deal.”
Qi Fan, executive director at Morgan Stanley, explains a growing trend
“We’ve found that a lot of the Chinese companies we speak to have IPOs in their eyes. It takes a while to pull them out of the clouds.”
Peter Broussard, director – business strategy and development of Celanese Corporation, on acquiring Chinese companies
“Becoming a concert party may be more than a nod and a wink but it is also considerably less than putting in a legally binding document.”
Ashley Alder, partner at Herbert Smith, warns about the dangers of becoming a concert party
“Give it your best shot on your first approval. Don’t make a series of proposals that creep towards a regulatory agreement.”
Martin Sabine, chairman of Somerley on getting Hong Kong takeover approval
See also:
Stories from the forum the forum
Why Indian open offer rules must change http://www.iflr.com/Article/2404780/Channel-Sector-News-and-deals/Why-Indian-open-offer-rules-must-change.html
A defence of Indian competition rules http://www.iflr.com/Article/2407675/Channel-Sector-News-and-deals/Spirited-defence-of-India-competition-rules.html
New Hong Kong practice note on cash confirmation http://www.iflr.com/Article/2404781/Channel-Sector-News-and-deals/New-HK-practice-note-on-cash-confirmation.html
Lawyers split over new Indonesian merger rules http://www.iflr.com/Article/2404782/Channel-Sector-News-and-deals/Lawyers-split-over-new-Indonesian-merger-rules.html
Take privates are too hard in Hong Kong http://www.iflr.com/Article/2404783/Channel-Sector-News-and-deals/Take-privates-are-too-hard-in-Hong-Kong.html