Thread: China is buying up American companies fast

http://www.businessinsider.com/chine...oncerns-2016-2

China is buying up American companies fast, and it's freaking people out

• Portia Crowe

Feb. 21, 2016, 12:05

Here's a story you'll be hearing about a lot this year.
Chinese companies have been buying up foreign businesses, including American ones, at a record rate, and it's freaking lawmakers out.
There is General Electric's sale of its appliance business to Qingdao-based Haier, Zoomlion's bid for the heavy-lifting-equipment maker Terex Corp., and ChemChina's record-breaking deal for the Swiss seeds and pesticides group Syngenta, valued at $48 billion.
Most recently, a unit of the Chinese conglomerate HNA Group said it would buy the technology distributor Ingram Micro for $6 billion.
And the most contentious deal so far might be the Chinese-led investor group Chongqing Casin Enterprise's bid for the Chicago Stock Exchange.
A deal spree

To date, there have been 102 Chinese outbound mergers-and-acquisitions deals announced this year, amounting to $81.6 billion in value, according to Dealogic. That's up from 72 deals worth $11 billion in the same period last year.
And they're not expected to let up anytime soon. Slow economic growth in China and cheap prices abroad due to the stock market's recent sell-off suggest the opposite.
"With the slowdown of the economy, Chinese corporates are increasingly looking to inorganic avenues to supplement their growth," Vikas Seth, head of emerging markets in the investment-banking and capital-markets department at Credit Suisse, told Business Insider earlier this month.
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China's economic growth in 2015 was its slowest in 25 years.
The law firm O'Melveny & Myers recently surveyed their mainly China-based clients and found that the economic growth potential in the US was the main factor making it an attractive investment destination.
Nearly half of respondents agreed that the US was the most attractive market for investment, but 47% felt that US laws and regulations were a major barrier. They'd be right about that.
A major barrier

Forty-five members of Congress this week signed a letter to the Treasury Department's Committee on Foreign Investment in the US, or CFIUS, urging it to conduct a "full and rigorous investigation" of the Chicago Stock Exchange acquisition.
"This proposed acquisition would be the first time a Chinese-owned, possibly state-influenced, firm maintained direct access into the $22 trillion US equity marketplace," the letter reads.
"While it is unclear the level of influence the state holds over CCEG, the firm is involved in a number of important Chinese sectors that would likely require close ties to the state."
CFIUS is meant to vet deals for any national-security issues. It recently prevented the $3.3 billion sale of Philips' lighting business to a group of buyers in Asia, but its reasons for blocking that deal weren't disclosed.

"I would be very surprised if CFIUS did not have an interest in taking a look at this deal," said Anne Salladin of law firm Stroock & Stroock, referring to the Chicago Stock Exchange deal.
Also this week, California-based Fairchild Semiconductor refused an offer from the state-backed China Resources and Hua Capital, the Financial Times reported.
They bid $2.6 billion for the company, but Fairchild turned it down, citing concerns about US regulators, and accepted a lower bid from a US-based rival.
While not all the companies doing the buying are state-owned enterprises, they do need to have the full backing of the Chinese government in order to close foreign deals. That's because they need approval to get enough foreign exchange to pay for the acquisitions, something the government monitors closely.
Given the recent volume of deals, though, it would appear that the Chinese government is supportive of the foreign-buying spree. That may be exactly what has folks so worried.

How can our Country be this Stupid ? CFIUS has evidently not been doing it's duty for years. China has been destroying our economy. Russia was allowed to purchase a large portion of our Uranium ore. We need to replace most of our corrupt politicians and bureaucrats.

AMC's Carmike bid extends Hollywood influence of China's richest man, Wang Jianlin


Shown is an AMC Theatres location in Monterey Park, east of downtown Los Angeles.
(Frederic J. Brown / AFP/Getty Images)


Ryan Faughnder Contact Reporter


Movie theater chain AMC Entertainment's proposed $1.1-billion acquisition of Carmike Cinemas is the latest deal to significantly extend the Hollywood influence of China's richest man, Wang Jianlin.

The move would give the 61-year-old billionaire's conglomerate Dalian Wanda Group, which owns AMC, control over the biggest theater chain in the U.S., furthering Wang's ambition to be a power player in the global entertainment industry.

Adding Carmike also could give the company additional clout in the sometimes contentious negotiations with studios over revenue splits for movies, analysts said.

The development comes just two months after Wanda said it would pay $3.5 billion for Burbank production company Legendary Entertainment, known for backing blockbusters including "The Dark Knight" and "Jurassic World." Wanda, a giant in the real estate and media businesses, is also considered a potential bidder for part of Viacom Inc.'s Paramount Pictures or another U.S. studio.

"Certainly, Wanda's influence over the market increases with this deal," said Eric Handler, a media analyst at MKM Partners. "Wanda believes in scale, and you see them making a lot of acquisitions. And I think that's also part of AMC's business plan."

Wanda, which owns China's leading movie chain, became the world's largest cinema operator in 2012 when it bought AMC for $2.6 billion.

Leawood, Kan.-based AMC is the second-ranked U.S. theater operator, with 387 locations and 5,426 screens. If the Carmike agreement closes as planned at the end of this year, it would surpass Regal Entertainment Group as the nation's top chain, bringing its reach to well more than 600 cinemas. Carmike is the country's fourth-largest exhibitor, with 276 theaters and 2,954 screens.

Wanda believes in scale, and you see them making a lot of acquisitions. And I think that's also part of AMC's business plan.— Eric Handler, media analyst at MKM Partners


Wanda has been on a deal-making spree. The company said last month that it will invest $3.3 billion in EuropaCity, an entertainment and retail complex near Paris.

"It certainly is a piece of Wanda's global ambitions in the entertainment industry, but also in the real estate market," said Lindsay Conner, an entertainment industry lawyer and partner in Manatt, Phelps & Phillips. "This [AMC] deal satisfies Wanda's corporate goal and Wang's personal goal to be the No. 1 theater business in the U.S., as they are in China."

Under the agreement announced Thursday, AMC would pay $30 a share in cash for Columbus, Ga.-based Carmike and assume debt. Wall Street cheered the deal. AMC's shares rose $1.32, or 5%, to $27.02 on Friday, while Carmike's stock soared 16% to $29.25.

Still, the offer may have undervalued Carmike, given the company's sway in smaller, regional markets, said B. Riley analyst Eric Wold. AMC's announcement could spark competing bids from Regal and No. 3 exhibitor Cinemark, he said.

"AMC is getting a bargain on an attractive asset," Wold said. "The question is going to be, did Carmike shop this around already?"


A behind-the-scenes look at filming around the world for television and movies as seen from the streets.


The proposed tie-up is the latest example of consolidation in the movie theater industry.

Carmike recently bought Robert Redford's Sundance Cinemas for $36 million in a deal encompassing five theaters, including the Sundance Sunset in West Hollywood. AMC last year took over 33-theater Starplex Cinemas in a deal worth $172 million. In 2013, Regal acquired Hollywood Theaters, a Portland, Ore., chain that operates 43 theaters in 16 states, for $191 million in cash and about $47 million in assumed lease obligations.

The concentration of the theater business comes at a time when exhibitors face long-term stagnation in attendance. Though the industry is coming off a record year at the box office, exhibitors continue to grapple with competition from other entertainment options, including streaming Internet video. Another problem is that the big Hollywood film companies are making fewer movies and focusing their efforts on their well-known franchises, forcing theater owners to increasingly rely on a few mega-hits a year to drive sales.

And unlike China's cinema industry, the U.S. theater business isn't building many new locations. Wold estimates the U.S. screen count has increased just 3% in the last decade.

"The problem is, domestically, there's no growth opportunity," Wold said. "If you want to get scale and efficiency, you need to buy someone else."

In recent years, major chains such as AMC have invested heavily in renovating and refurbishing their multiplexes with features such as upscale food, reclining seats and new sound and digital equipment to entice moviegoers. AMC is expected to make improvements to Carmike's theaters.

The deal would extend AMC's reach in smaller towns, suburban areas and rural regions where Carmike is a powerful player. AMC's influence, meanwhile, is mainly concentrated in major cities.

"Wherever you go, this deal is complementary," said AMC Chief Executive Adam Aron in an interview. "We're strong in large cities, they're strong in smaller cities. We're strong in the Northeast, and they're strong in the Southeast.

The addition of Carmike increases our scale and our scope and allows us to take the successes we've had and extend them to these additional theaters."

The proposed pact is likely to face scrutiny from federal antitrust regulators, and analysts expect the combined company to divest some of its theaters in order to pass muster. The Justice Department last year ramped up an investigation into whether theater owners are violating federal law by preventing smaller rivals from playing movies at the same time.

http://www.latimes.com/entertainment...305-story.html

Not just the Chinese.

Indian immigrants and their children own half of the motels in the U.S.