Multinational corporations divesting their China subsidiaries
At Oaklins, we have many years of experience in completing corporate divestments for clients across the globe and helped several multinational corporations carve out their subsidiaries in China. Setting up a successful operation in China is not an easy task. If you wish to change your corporate strategy or are being pushed out by local competition or are simply facing poor performance, divesting your company to a strategic buyer may be the wisest choice. This could be a Chinese player needing to acquire the seller’s manufacturing base and existing clientele, or it could be another foreign player seeking to enter China.
China’s economy is changing rapidly. Originally, many multinationals built up an operation in China to stay competitive in the global market due to cheap labor costs and lower environmental standards. However, things have changed significantly in recent years. With its “Made in China 2025” strategy the government is transforming its economy, putting more focus on the domestic market. Thus, multinationals will only be successful in China if their main focus is on the local market. Consequently, a number of large corporates will decide to move on to other production sites in the world with still lower labor costs, such as Vietnam, Bangladesh or even India. This, in our opinion, will lead to more carveouts of western conglomerates.Dr. Florian von Alten, Managing Partner, Oaklins, Germany
Furthermore, as the impact of COVID-19 continues to unfold, the world is becoming more divided, and supply chains have been disrupted. As corporate companies navigate through the uncertainty in this current financial climate, release of capital through the sale of non-core activities can have a significant impact on a company’s future strategic position and economic development.
Multinationals in China need to make a critical choice: either to invest more in the Chinese market through acquisitions or to exit the market by realizing the value created in the past few years. During the last 10 months, Oaklins’ China team has advised on three corporate divestiture transactions for multinationals in China across various industries and countries. The success stories of how these multinationals completed their strategic shifts may serve as a valuable inspiration to you.Angela Chen, CEO and Managing Director, Oaklins, China
With an 850-strong group of committed M&A experts in over 45 countries globally, solid industry expertise and wide strategic and financial connections locally in China, and a long tradition of working in cross-border teams with proximity to both the client and specific targets, Oaklins is perfectly equipped to help companies sell their business and exit the Chinese market with maximized economic value. The highlighted case stories demonstrate how our expert teams in China, Germany and Switzerland persistently collaborated to face the challenges that characterize these carveout transactions and materialized a successful outcome for their clients.
Dussmann Group, headquartered in Germany, has sold Dussmann China and Dussmann Hong Kong to CITIC Capital
Dussmann Group has sold its subsidiaries Dussmann Property Management (Shanghai) Co., Ltd. and Dussmann Service Hong Kong Limited to CITIC Capital, completing its strategic geographic upgrade.
Oaklins’ team in Shanghai understood our vision and strategic criteria. Their access to local investors in the Chinese market, expertise of working international processes and collective team effort contributed to the successful completion of the transaction.Sebastian Bahnsen, Head of M&A, Dussmann Group
Oaklins’ team in Germany initiated the contact between Dussmann and our Oaklins team in Shanghai. While the German team acted as the head-office point of contact, the transaction process was managed by the team in Shanghai, who identified and communicated with potential buyers, providing valuation guidelines, facilitating management presentations, assisting due diligence and negotiating key terms in the sales and purchase agreement (SPA).
The deal team:
Bühler Group, based in Switzerland, has sold its flour ingredient business to Bakels Group
Bühler Group has divested its flour ingredient business to Bakels: 100% of China-based Buhler Bangsheng Food Ingredients (Guangzhou) Co., Ltd.’s shares have been signed over to Bakels Group, and all employees are transferring to the new owner.
Oaklins’ team in Switzerland acted as the exclusive M&A advisor to Bühler Group during the entire sale process and was supported by our Oaklins team in Shanghai. While the Swiss team prepared the marketing materials, identified and approached potential buyers, organized the due diligence, and negotiated the SPA terms, Oaklins’ team in China conducted the management meetings with the bidders and provided support for all China-related topics. This seamless cooperation speeded up the process substantially.
Oaklins has given us the optimal support for this very successful transaction. Professional, dedicated and with a seamless global service.Mark Macus, CFO, Bühler Group
The deal team:
Xella Group, headquartered in Germany, has sold Changxing Ytong Co., Ltd. to UBlock International HK Company
Xella Group has sold Changxing Ytong Co., Ltd. (Ytong) to UBlock International (Hong Kong) Company.
Oaklins’ team in Shanghai and Germany advised the seller in this transaction. The team negotiated terms with the buyers and coordinated the whole process.
As part of this transaction, Oaklins established contacts with an extensive array of potential buyers in China and worldwide on behalf of Xella, thereby creating a good, competitive environment for this transaction. The Oaklins team coordinated the entire process, advised Xella at all stages of the transaction and negotiated the terms with the prospective buyers.Michael Jackson, Senior Corporate Development Manager, Xella Group
The deal team: