Achievement Awards: Why they won, Part 2

We explain in detail why the winning deals by category stood out.

In November, FinanceAsia announced the winners of its Achievement Awards for the past year, picking out the best private banks and the most impressive deals by country and deals by category. We also honoured the outstanding banks, financial institutions and law firm in the region.

Today, we explain in depth why the outstanding deals by category won over our panel of judges. Yesterday, we looked at the outstanding deals by country. We'll conclude tomorrow with the house awards. All awards will be handed out at a special ceremony on February 16 at the Grand Hyatt Hong Kong.

DEAL OF THE YEAR, BEST M&A DEAL

Tencent-led consortium’s $8.6 billion acquisition of Supercell

Target adviser:  Morgan Stanley

   Acquirer adviser: Bank of America Merrill Lynch

Seller adviser: Mizuho, Morgan Stanley and Raine Group

BEST LOAN, BEST LEVERAGED FINANCE LOAN

Tencent’s $3.5 billion financing for Supercell acquisition

MLABs: ANZ, Bank of America Merill Lynch, Bank of China, China Merchants Bank, Deutsche Bank, HSBC and Shanghai Pudong Development Bank

Tencent was one of several Chinese technology companies that turned overseas for acquisitions this year. Home appliances company Midea bought German robotics maker Kuka. Alibaba made a rare offshore acquisition when it bought Lazada in April. Ctrip launched a bid for Skyscanner.

These were all eye-catching deals. But a Tencent-led consortium’s acquisition of Supercell managed to stand out from the crowd. It was the largest acquisition of a games company ever and the largest ever Chinese technology acquisition. More importantly, it was an impressive strategic move.

Tencent joins the game

Tencent owns Chinese internet platforms QQ, WeChat and Tenpay, among others. QQ alone had 877 million monthly active user accounts at the end of the third quarter, according to the company’s latest results. That gives Tencent a captive audience for the profitable games that Supercell makes, games including the popular Clash of Clans and Clash Royale.

But Tencent did not want to simply absorb Supercell into its own business. The Finnish company was left to run as a separate entity by owner Softbank, and Tencent decided it did not want to fix what clearly was not broken. Supercell got “maximum management independence”, according to a statement by Tencent in June.

There was another reason Tencent wanted Supercell to be a separate entity under its control. As one banker put it, games companies are closer to utilities than they are to internet companies like Tencent. They return regular cashflows as gamers buy upgrades or additional content. But they rarely reach the high multiples that Tencent has achieved. The company was trading at a price-to-earnings ratio of around 40 when FinanceAsia's awards issue went to press.

The financing package for the deal reflected the desire to keep Supercell at arms length. Since Tencent used a special purpose company to make the purchase, it was clear that the loan made sense most as a non-recourse financing.

That forced Tencent to pay up over where it could close a stand-alone loan, forcing the bookrunners to juggle the borrower’s demands for a tight price with opportunism from smaller bank lenders. The deal ended up coming with a margin of 212bp over dollar Libor.

The non-recourse structure meant the loan was by no means automatic for a lot of smaller lenders. But since the bulk of the transaction was funded through an equity investment, Tencent ensured that lenders had a relative degree of confidence.

The financing package for the deal consisted of a $3 billion term loan and a $500 million revolver. The seven bookrunners fully underwrote all of that, having confidence in their ability to attract a mix of lenders to come in during general syndication.

In the end, they did just that. They managed to cover the syndication more than twice, getting enough demand to spread the risk among 16 banks.

This included heavy demand from Chinese banks, several of which came in during the top level of syndication. But it also included a mix of Taiwanese banks, as well as the addition of State Bank of India of the arranger level.

The smooth execution of the non-recourse loan, and its place in a financing package with many moving parts, made it stand out for our best loan and best leverage financing awards.

But the deal was more than just a smart funding package. It was a deft strategic move by a Chinese technology company that wanted the benefits of a European games giant without the negatives.

Chinese companies have indeed gone offshore in a big way this year. But none have done it with the foresight and the timing of Tencent. There can be no better pick for our deal of the year.


BEST EQUITY DEAL, BEST IPO, BEST KOREA DEAL

Samsung BioLogics’ $2 billion IPO

Global coordinators: Citigroup and Korea Investment & Securities

Bookrunners: Credit Suisse, JP Morgan and NH Investment & Securities

It has been a disappointing year for many primary market investors. Almost all billion-dollar IPOs in the region failed to perform in 2016, making investors wonder why they have bothered. Samsung Biologics was the exception.

The drug manufacturing arm of Samsung Group, Korea’s largest conglomerate, surged nearly 30% in three trading days after listing its shares on November 9, making it one of the most profitable IPOs in the region this year. That was even more surprising considering the shares were priced at the top of the indicative W113,000 to W136,000 price range.

Structuring and executing the deal was by no means easy. Syndicate banks had to gather huge demand — the transaction was Korea’s second largest ever. The relatively new industry of biologics, the firm’s short operational history and a lack of track record of profitability all weighed on potential investor demand for the IPO.

During the international roadshow, the company’s senior management made it clear that the firm was still in its development stage, telling investors Samung BioLogics would only generate meaningful profits by 2020.

To make matters worse, the IPO was executed towards the end of a very disappointing year for Korean IPOs. The cancellation of a highly-anticipated $4.8 billion offering for Hotel Lotte and the massive downsize of Doosan Bobcat’s IPO all suggested that investor sentiment for new listings may be at a trough.

Perhaps the biggest obstacle to marketing was the timing of the deal. The book was built during the final days of the contentious US presidential election and trading was set to begin just hours after the announcement of the result, meaning that investors took on extra risk of buying in a potentially volatile market.

But the syndicate bankers managed to clear all of these hurdles. They conducted extensive pre-deal meetings to ensure that the firm’s price targets were aligned with where investors wanted to see the deal price. As a result the order book was fully covered at launch — and was nearly seven times covered by the end of the bookbuild.

The bookrunners were able to convince investors to look past the short-term and concentrate on the long-term growth prospects of the company. That in itself was impressive. But doing that in a potentially hazardous market made the deal all the more striking — and a clear choice for best equity deal of 2016.


BEST SECONDARY OFFERING

Softbank $6.6 billion mandatory exchangeable bond and $3.4 billion share placement in Alibaba

Bookrunners: Deutsche Bank and Morgan Stanley

Softbank’s $10 billion monetization of Alibaba was FinanceAsia’s best secondary offering of the year because it was so neatly designed to achieve a win-win situation for both the seller and the buyers.

Tech focus: Softbank

Japan’s second largest telecommunications firm made a tough ask of investment bankers when it unveiled plans to divest some of its stake in Alibaba as part of its debt restructuring.

The first hurdle was the size. At $10 billion, the transaction was bigger than any equity offering globally in 2016. It was equivalent to about 40% of the size of the Chinese e-commerce giant’s record-setting initial public offering in 2014.

It was almost certain that such a large selldown in the secondary market would create a massive overhang on the stock and send a signal to the public that Softbank was cashing out. That would have been unfavourable to Alibaba but also to Softbank, which has $58 billion worth of Alibaba shares after the selldown.  

In order to demonstrate Softbank’s long-term view on Alibaba despite the selldown, syndicate banks have structured the bulk of the deal in the form of mandatory exchangeable trust securities.

The mandatory exchangeable structure allowed Softbank to retain some of the upside of the stock since the trust securities will be exchanged into fewer shares if Alibaba’s share price appreciates over the three-year tenor of the securities.

The structure introduced a new class of investors including equity-linked specialists and income funds to Alibaba stocks. Before the deal, these investors were unable to trade Alibaba because it has no outstanding equity-linked product and does not pay dividend.

The structure proved a novel solution — and a clear success. The mandatory exchangeable tranche was fully upsized to $6.6 billion from $5 billion a day after pricing on June 1.

Alongside the deal, the syndicate banks executed a share placement with investors including GIC, Temasek and senior members of the Alibaba management team.


BEST EQUITY-LINKED DEAL

China Overseas Holdings’ $1.5 billion exchangeable bond and tender offer

Active bookrunners: Citigroup, Goldman Sachs and HSBC

Bookrunners: Bank of America Merrill Lynch, BNP Paribas, BOC International and CICC

In a year in which Asia’s equity-linked market enjoyed something of a revival, China Overseas Holdings’ $1.5 billion exchangeable bond into shares of Hong Kong-listed subsidiary China Overseas Land and Investment (COLI) stood out on the complexity of the structure and the innovative solution offered to the issuer.

The bookrunners demonstrated their skill by presenting a liability management solution to China Overseas Holdings, which had an outstanding $750 million exchangeable in COLI at the time of the new issue.

At that time, the parent company was facing a potential conversion of the outstanding bond since COLI’s stock price was only 3% away from the strike price. But any conversion would have been unfavourable since it would have diluted China Overseas Holdings’ stake to about 58% from 61%, putting it a step closer to the 51% minimum threshold.

In response to the situation, syndicate banks proposed issuing a new exchangeable bond and a concurrent buyback of the existing note, allowing the parent to reset the exchange premium and avoid immediate conversion.

As part of the tender process, the banks changed the clean-up call provision to allow full redemption when two-thirds of the bonds were tendered. It was the first such amendment in the equity-linked market, according to bankers, and ensured that the existing bonds would not be left over after the new issue was completed.

In the end, the new deal was fully upsized to $1.5 billion from $1.2 billion. China Overseas was also able to save some interest costs since the new bond has a 2.75% yield-to-put, which was 75 basis points tighter than 3.5% for the old bond.

The 53.42% exchange premium for the new deal was the highest ever among all Asia ex-Japan equity-linked products. The aftermarket performance was also solid with the bond trading up 100 basis points on its debut.

There was plenty of competition for this award, as equity-linked bankers stepped up in a volatile year. But for its smart pricing and clever clean-up, China Overseas wins this award.


BEST INVESTMENT GRADE BOND

Cheung Kong Infrastructure’s $1.2 billion fixed-for-life perpetual

Global coordinator: Deutsche Bank

Bookrunners: HSBC and JP Morgan

Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure (CKI) raised $1.2 billion from the sale of an upsized perpetual bond in February, taking advantage of investors’ ongoing search for yield when the US Treasuries remained stuck near 50-year lows.

Despite a slow start to the year, the BBB rated sale was able to capture a sizable order book from global investors who viewed the company as a low-volatility bet. The final order book reached $2.4 billion from 120 accounts, or about two times oversubscribed. As a result of strong demand, the issuer decided to raise the deal size from $1 billion to $1.2 billion.

To ensure a successful sale of the perpetual security, the syndicate banks started the so-called “wall-crossing”, the process designed to ensure investors don’t trade on non-public information provided in the course of discussing deals, one week before the deal was officially launched. The proactive approach paid off handsomely and allowed bankers to secure large anchor orders.

Private bank investors accounted for 45% of the entire allocation, followed by insurance companies taking 28% and fund managers, which were allocated 26%. The final pricing of the perpetual bonds was settled at 5.875%.

The proceeds of the BBB rated deal were used to repay a $1 billion 6.625% perpetual bond that has a call option in March 2016. That bond came with a coupon step-up, but since the latest issue did not have that, analysts think it is unlikely it will ever be called.

This made the bond incredibly attractive from CKI’s point of view. It has been able to lock in a low cost of hybrid capital for the rest of time.


BEST HIGH-YIELD BOND

Cikarang Listrindo’s $550 million 10NC5

Global coordinators: Barclays and Deutsche Bank

Cikarang Listrindo, a Ba2/BB rated power producer, took a mature approach when selling its $550 million bond in September, spending plenty of time building up a real source of demand from accounts across the globe.

The bookrunners arranged an usually long roadshow for a high yield deal. They took the company’s management to meet investors in Hong Kong, Singapore, London, New York and Boston, as well as arranging phone calls with investors in the US West Coast.

The wide marketing process for the deal clearly paid dividends.  A total of 176 accounts participated, with 41% placed into Asia, 30% in the US and 29% in Europe. But perhaps more impressively for a high yield bond, around 86% was sold to funds — compared to just 6% that was allocated to retail accounts.

The 10 non-call five-year transaction represented the first 10-year deal from Indonesia since Indika Energy’s $500 million offering in January 2013. The maturity certainly appeared to investors — the deal generated a $4 billion order book.

One of the key reasons for Cikarang Listrindo’s success was its Ba2/BB rating, which gave investors a far higher degree of comfort about a country whose corporate issuers have a long track record of upsetting performance expectations. Added to this was the rarity value of an Indonesian private sector credit from the upper end of the high-yield universe.

Cikarang Listrindo set out with initial guidance around the 5.375% level and unusually for an Asian issuer, built up a shadow order book in the US. That early demand helped the deal eventually price at 4.95%.

It was not the best year for Asia’s high yield bond market, with some deals delayed and others abandoned. But Cikarang stood out from the crowd by taking a mature approach to distribution — and bringing a raft of new funds to its investor base.


BEST LOCAL CURRENCY BOND

HDFC’s Rs30 billion masala bond

Global coordinators:  Axis Bank, Credit Suisse and Nomura

There are not many issuers that can claim they opened a market. But Housing Development Finance Corp (HDFC), India’s largest mortgage lender, can arguably make such a claim. Although International Finance Corporation was the first to ever sell a masala bond, HDFC became the first Indian issuer to do so — opening a market that is sure to grow in the years to come.

It was not only Indian issuer to make such an attempt. For months, a number of companies roadshowed potential transactions before abandoning them in the face of weak demand and concerns about the direction of the rupee.

Serving up masala: HDFC

But HDFC timed the deal well — or perhaps enjoyed good fortune — since when it turned to offshore investors in July, the rupee was finally starting to strengthen.

It also proved flexible in meeting investors’ demands. A big sticking point with investors was the government’s 5% withholding tax on offshore bonds. HDFC decided to absorb the additional cost to ensure the market got off the ground.

As a result, HDFC’s Rs30 billion ($448 million) deal set a benchmark for future borrowers. It was a benchmark that government-owned power company NTPC quickly used when it sold its own deal the following month.

There is some debate between bankers over how big the masala bond market can become. Some see echoes of the early beginnings of the offshore renminbi market, which grew rapidly. Others point out that the offshore renminbi market is, itself, now much smaller than bankers had hoped for. But there is reason to think there will be plenty more life left in masala bonds for years to come.

HDFC will no doubt be a part of that future issuer base. But the non-bank lender will also have one bragging right over its rivals — it was there first.


BEST SOVEREIGN BOND

Republic of the Philippines’ $2 billion accelerated 1-day “switch” tender offer and new 25-year dollar bonds

Global coordinators:  Citi, Deutsche, HSBC and Standard Chartered

Bookrunners: Credit Suisse, JP Morgan, Morgan Stanley and UBS

The Republic of Philippines’ $2 billion accelerated one-day “switch” tender offer and new 25-year dollar bonds benefited from a few clear strengths. One was the name recognition of an issuer that has become less frequent over the last few years. The other was savvy advice from banks.

The liability management exercise was a mirror image of a similar process in January 2015 — but this time on much a larger scale and in far more volatile markets. This time around, the Philippines tendered 16 bonds with $21 billion of aggregate notional value.

After the offer period closed, the sovereign announced that it had accepted $1.5 billion in the tender process from five bonds spanning 2016, 2017, 2020, 2032 and 2034 maturities.

The total demand for the switch — which gave investors new bonds in exchange for old — topped $4.2 billion when the final price guidance was announced. A further $8 billion of demand came from new investors and in the end, an eye-popping 759 investors participated.

As a result, the final order book was very close to the $13.5 billion of combined demand the Republic achieved in 2015. This was a stunning achievement considering how much more difficult markets were in February 2016 compared to January 2015.

The Philippines success was partly down to the fact that emerging market funds now view the Philippines as their safe haven asset, not a situation the country has found itself in for most of its overseas borrowing history.

But it was also because funding officials worked hand-in-hand with their debt bankers to appeal to investors at a time of volatility. The Philippines is one of the few credits that could have managed such a complex and impressive process.


BEST GREEN BOND

MTR’s $600 million green bond

Bookrunners: Bank of America Merrill Lynch, Goldman Sachs and HSBC

MTR Corp, the operator of Hong Kong’s mass transit railway, returned to the international bond markets for the first time in four years in late October. But this time, the Aa1/AAA rated issuer came back with something a little different — its first foray into green bonds.

MTR issued a $600 million 10-year note, part of a broader campaign initiated by the government of Hong Kong to tackle pollution and promote public awareness and education.

The issuer initially went out with a price guidance of 95 basis points over the 10-year US Treasuries, before tightening the spread to 85 basis points. Final pricing of the November 2026 bond was fixed at 99.675 on a coupon of 2.5% to yield 2.537%.

On the green line: MTR

The main rationale for selling a green bond is to diversify investors. This is particularly true in the European market, where specialist green bond funds provide a captive investor base — and a relatively easy sell. European and Middle Eastern investors took 17% of MTR’s new deal, which is higher than most green bonds in the region.

The bulk of the deal was, however, taken by Asian investors, who bought the remaining 83%. Asia is a region that does not have a well-established green bond investor base, but Asian investors are becoming more used to putting their money into environmentally-friendly deals.

In order to continue that growing familiarity, investors will need more green bond isauance. In particular, they will need more issuance from Asian companies that combine high credit ratings with true green credentials. MTR Corp certainly fits the bill.


BEST PROJECT FINANCE DEAL

BP Berau’s $3.745 billion Tangguh LNG financing

Mandated lead arrangers: Asian Development Bank, BNP Paribas, Bank Negara Indonesia, Bank of China, CCB Bank, Credit Agricole, DBS, JBIC, KFW, KDB, Mitsubishi UFJ Financial Group, Mizuho, OCBC, Bank Mandiri, Bank Rakyat Indonesia, Indonesia Infrastructure Finance, Shinsei Bank, Sumitomo Mitsui Financial Group, UOB

Indonesian bankers have been talking for years about developing a project finance market in the country. But convincing local banks to price and assume project risk has never been easy, meaning that deals have all too often relied on foreign banks — and in particular, multilateral lending institutions — for funding.

BP’s $3.745 billion project finance loan for the expansion of its Tangguh liquefied natural gas facility was a step in the right direction.

The deal attracted a breath-taking mix of bank lenders, alongside ever-reliable lenders such as the Asian Development Bank and Japan Bank for International Cooperation. But it also brought in a handful of Indonesian lenders.

Bank Mandiri and Bank Rakyat Indonesia joined the deal as mandated lead arrangers, according to Dealogic. Government-owned lender Indonesia Infrastructure Finance came in at the same level. It was the first time that Indonesian banks had ever joined an LNG financing, according to Indonesia’s oil and gas regulator.

The deal faced tough competition for this award from Oyu Tolgoi’s $4.41 billion financing for the expansion of a Mongolian copper and gold mine. That deal came to the market after a long, bumpy ride, but in the end proved an undoubted success. It also got a good financing mix, getting pledges from banks in Australia, Europe, and Asia, as well as US export credit agencies.

But Tolgoi’s guarantee from Japanese specialist guarantor MIGA made it an easier sell — and although the project will certainly contribute to Mongolia’s development, the loan itself will do little to develop Mongolia’s financial system.

Asia’s project finance market has a long way to go. Some banks pitched asset-purchase loans for this award; plenty of others pitched loans that had recourse to a corporation. Many loans rely for part of their demand on the presence of a foreign backer — in this case, BP.

But the market is constantly making steps in the right direction. By combining a successful transaction with strong local demand, BP Berau’s LNG loan was undoubtedly such a step.


MOST INNOVATIVE DEAL

Astrea III’s $510 million collateralised fund obligation

Arrangers: Credit Suisse and DBS

Securitisation is no longer a dirty word, but it is not a common one either.

In China, the tide has turned. China’s residential mortgage-backed securitisation market has been developing for years. Chinese banks are adopting ABS structures and covered bonds for their offshore fund-raising, slowly helping to develop recognition of the benefits of securitisation technology.

But throughout much of Asia, securitisation is either ignored or kept as vanilla as possible. One notable exception this year was in Singapore, when a fund ultimately owned by Temasek managed to securitise a pool of cash flows from private equity funds.

Astrea Capital, a subsidiary of Temasek’s Azalea Asset Management, decided to reduce some of its exposure to 34 private equity funds it had invested in. But instead of simply withdrawing its money from the funds, Astrea decided instead to keep the exposure — but pass off the risk for the next few years.

It turned to Credit Suisse and DBS to help arrange a collateralised fund obligation, and ending up selling a mix of dollar and Singapore dollar-denominated notes. The top-tier tranches, a S$228 million ‘A1’ three year tranche note and a $170 million five year both came with a loan-to-value ratio (LTV) of 14.9%. They paid investors returns of 3.9% and 4.65%, respectively.

But the bookrunners were also able to find demand for two lower-ranked tranches, a $100m ‘B’ note with an LTV of 8.8%, and a $70m PIK note with an LTV of 6.1%. The overall orderbook was more than eight times oversubscribed.

Asia needs more deals like this. It may not be time for all the worst excesses of securitisation to make their return. But the response to Astrea’s deal shows there is clear demand, and for those funds, banks and corporations with a need to shift assets off their balance sheets, a little more securitisation could be just the answer.


BEST PRIVATE FINANCING

Didi Chuxing’s $4.5 billion private placement

Financial advisors: China Renaissance and Credit Suisse 

Didi Chuxing, the operator of China’s largest taxi hailing app, raised $4.5 billion of equity in the largest private fundraising round in the global technology sector in June.

It was the second fundraising round since the company was established after the merger of taxi hailing duo Didi Dache and Kuaidi Dache in 2015.

But the June funding round was arguably more important, since it formed a vital part of its acquisition of Uber’s China operations.

The equity sale provided the bulk of an overall $7.3 billion fundraising — including $2.8 billion in debt — that gave Didi Chuxing the firepower to acquire Uber two months later.

The tie-up between Didi and Uber enabled the company to stem its losses from user subsidies that both companies were offering to win business. That said, the long-term impact of the decision is still up for debate.

Unlike most private fundraisings, which are dominated by strategic partners or institutions, Didi Chuxing opened the door to a much wider range of investors that includes asset managers and hedge funds.

The final line-up included a large mix of accounts, among them new investors such as Apple, Ant Financial, Poly, China Life Insurance and China Post Group. .

Despite the absence of public information or a valuation consensus, the financial advisors were able to put together the transaction in less than five months, which is relatively quick compared to other private fundraising cases.

The funding round valued Didi Chuxing at a post-money valuation of $28 billion, more than four times larger than the $6 billion valuation it achieved when the Didi/Kuaidi merger took place .


BEST FIG DEAL

Bank of China (Hong Kong’s) $8.7 billion sale of Nanyang Commercial Bank to China Cinda Asset Management

Target adviser: BOC International and Goldman Sachs

Acquirer adviser: Morgan Stanley and UBS

In May last year, Bank of China (Hong Kong) announced its plan to sell its stake in Nanyang Commercial Bank. It was part of a wider restructuring plan by Bank of China, which wanted to shift more of its Southeast Asian assets to its Hong Kong unit. But first the sale of Nanyang needed to go ahead smoothly.

Bank of China (Hong Kong) picked BOCI Asia and Goldman Sachs to advise it on the deal, and they set to work finding potential buyers for the asset. That was not an easy task.

A collapse in China’s stock market in the middle of the year frazzled nerves, limiting the potential buyers of the deal. Bankers also had to contend with an unusually public bidding process that was done through the Beijing Financial Assets Exchange.

But in the end, China Cinda Asset Management stepped in, proving willing to pay HK$68 billion ($8.8 billion) for the Hong Kong bank. That valuation gave Nanyang a price-to-book value of 1.85x, and an adjusted price-to-book of 2.2x, according to bankers.

It was the largest FIG M&A deal ever completed in Hong Kong, and the largest bank acquisition ever completed anywhere in Asia ex-Japan. But perhaps more impressive than the sheer size of the deal was how it was quickly able to close against multiple regulatory hurdles.  On May 27, BOCHK announced that this process was complete.

The restructuring of Bank of China’s business may just be starting. But one thing is clear — it was a good start.


BEST PRIVATE EQUITY DEAL

FountainVest, CrestView and CPPIB’s $920 million sale of Key Safety Systems to Ningbo Joyson Electronic

Target adviser: Citi and UBS

Acquirer adviser: Haitong Securities

It is said that the best deals are those where both parties walk away happy. That appears to be the case with FountainVest, CrestView and CPPIB’s sale of Key Safety Systems to automotive electronics supplier Ningbo Joyson Electronic.

It was the biggest cross-border exit FountainVest has ever achieved. It was also a remarkably quick turn-around for the fund. FountainVest invested in the company in August 2014, at the same time as CPPIB. Less than 18 months later, it had managed to get out at a price that gave the consortium “a very successful exit”, according to bankers.

This was partly because Citi and UBS, the advisers to Key Safety Systems and the seller, made sure to keep the pressure on Ningbo Joyson.

The banks mooted an IPO if the sale did not go through, stressing that the sellers were confident they had other options. They put this on the backburner after the offer was made after an offer was made, but said they would not completely discontinue the process until the merger agreement was signed.

Ningbo Joyson had reason to bow to the pressure. The acquisition of Key Safety Systems will turn it into a major force in the automotive supplier business, giving it worldwide sales of around $3 billion, according to bankers. The acquisition was also part of the company’s wider expansion strategy.

On the same day Ningo Joyson announced it was buying Key Safety Systems it also told investors it was going to take over TechniSat Digital, a German manufacturer of direct broadcast satellite receivers, for €180 million ($205 million).

Ningbo Joyson has quickly developed into one of China’s largest auto component suppliers. It has a raft of global clients, including car makers Volkswagen, General Motors, and Mercedes-Benz. It now has a raft of global businesses, too. 

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