We are currently seeing a resurgence in the China-Europe M&A (Mergers & Acquisitions) market, characterized by the following features:
A. Increased interest among Chinese investors in European companies (in some cases, specifically German companies or those from German-speaking countries, i.e., D-A-CH)
- Chinese companies are increasingly seeking acquisitions in order to, on the one hand, tap into sales channels in Europe through the acquired companies and, on the other hand, boost their business success by gaining access to Chinese markets
- According to empirical analyses by MRL Advisors, China’s capital markets also significantly reward these strategic acquisitions by Chinese companies
- In addition to acquiring stakes in European companies, some Chinese buyers are also interested in the existing Chinese subsidiaries of European companies
- Both full and partial takeovers are relevant in this context
- As before, the target sectors are the core sectors of German-speaking small and medium-sized enterprises (see the illustrative list below), along with life sciences and, as before, select pure-play distributors (electronics retailers, such as JD.com and Saturn).
- Since the expansion of business in Europe, among other factors, is a key driver behind the acquisition, MRL Advisors believes that the target company is likely to perform well following the investors’ entry
- As part of succession planning, MRL Advisors has already successfully facilitated and executed strategic, long-term transactions with Chinese investors.
B. Increased Interest Among European Companies in Partnerships in China
- The demands for localizing value-added activities in China continue to rise in many tech sectors (participation in China’s innovation ecosystems; “China Speed,” increased local competition, etc.).
- In many cases, acquiring a stake in Chinese companies or forming viable strategic alliances is an effective approach
- Chinese companies are still often open to strategic partners from Europe, though the window of opportunity is limited. A Chinese tech entrepreneur told MRL Advisors:
““European companies still have until 2030 to form alliances with Chinese companies. After that, the window of opportunity will close.”
Selected Mid-Cap Transactions Involving China Through 2025
MRL Advisors has received inquiries from China regarding the following M&A targets (by way of example)
1. New and renewable energy sources: a) New energy equipment; b) New energy materials.
2. New Materials: a) Photoelectric display materials; b) New energy-related materials; c) Cutting-edge advanced materials (graphene, diamond, high-purity quartz, superconductors, 3D printing, and intelligent bionics), etc.
3. Aerospace: a) Promote commercial aerospace (reusable rockets, satellite internet) and the low-altitude economy (unmanned aerial vehicles, eVTOL passenger aircraft); b) Aerospace and automotive materials (carbon fiber, high-temperature alloys, etc.)
4. Advanced Manufacturing: a) Sensors; b) Specialty lighting; c) Automotive supply chain; d) Robots (complete machines and components); e) Machine tools and intelligent equipment.
5. Semiconductors: a) Full industry chain (design, manufacturing, packaging); b) Semiconductor materials; c) Semiconductor equipment.
6. Life Sciences – a) Medical Devices, b) Biotechnology.
If you are interested in M&A involving China or within China, please feel free to contact MRL Advisors.
