Wed, Mar 20, 2019 - Page 12 News List

China woes to improve M&A prospects in Taiwan

By Crystal Hsu  /  Staff reporter

The merger and acquisition (M&A) outlook in Taiwan is to improve this year, as Chinese firms become more low-key amid an economic slowdown and strict oversight, Ernst & Young Taiwan (EY) said yesterday.

Local manufacturers have expressed keen interest in acquiring US firms to integrate their global supply chains, and some efforts might bear fruit later this year, EY transaction advisory services executive director Feng Chih-wei (馮熾煒) said.

Feng declined to name companies, saying that such matters require confidentiality.

For example, Taichung-based toner cartridge maker General Plastic Industrial Co (GPI, 上福全球科) in 2017 purchased Katun Corp, a US supplier and distributor of toner, ink and parts for copiers, printers and other imaging equipment, Feng said, adding that the acquisition has helped ensure demand for GPI products.

Taiwanese companies’ M&A efforts become difficult when Chinese participants enter the scene, often with unreasonably high offers, Feng said.

However, competition from across the Taiwan Strait might mellow this year, as Chinese companies struggle to cope with an economic slowdown that might drag the nation’s GDP growth below 6 percent, Feng added.

China used to encourage overseas investments, but is trying to rein in capital outflows, Feng said, adding that M&A bids by Chinese firms have been receiving backlash.

The change is to boost success for Taiwanese firms, Feng said.

Some small and medium-sized companies, popularly referred to as “hidden champions,” are highly competitive on the world stage and can increase their economic scale and number of customers through M&As, Feng said.

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