Oct 24, 2019

The trade war is killing U.S.-China business deals

Dion Rabouin, author of Markets
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Data: PitchBook; Chart: Axios Visuals

Global mergers and acquisitions activity is poised to slow this year and next, but nowhere has M&A activity been slowed like the pace of deals between the U.S. and China.

Why it matters: "M&A has been one of the areas hit hardest by the trade war, with deal value for North American target companies with a Chinese acquirer on pace to fall by over 90% since peaking in 2016," a new report from PitchBook finds.

Between the lines: The slowdown is the result of the U.S.-China trade war, and while much of it can be attributed to growing business uncertainty, the U.S. government also has stepped in to actively prevent large-scale tie-ups on multiple occasions, often citing national security concerns.

  • "The Committee on Foreign Investment in the United States (CFIUS) has already blocked Broadcom’s $100 billion-plus attempt to purchase Qualcomm on national security grounds," PitchBook's Q3 North American M&A Report notes.
  • "In addition, CFIUS has also overturned completed deals. In one high-profile case, Beijing Kunlun Technology Company had to sell US-based dating app Grindr after the deal had already settled."

The bottom line: "Although it is uncertain how — or indeed if — the trade war will end, a protracted period of low cross- border investment between the US and China seems almost certain."

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