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Deals in China’s Retail and Consumer sector:

2019 review and 2020 outlook

Reigniting M&A as consumption returns

April 2020

Contents

Foreword 2

Overview 3

Summary of 2019 4

The impact of COVID-19 on China’s R&C sector 8

2020 outlook 10

Review of 2019’s announced transactions 12

• Online retail 13

• Traditional retail 14

• Food & beverage 15

• Hotel, dining and leisure 16

• Sport leisure and textiles 17

Deals valued at over US$500 million in 2019 18

• The data and analysis presented here are for the China Retail &

Consumer (R&C) sector only*. All transactions are equity transactions

(excluding asset transactions), unless otherwise stated;

• The data presented is based on information compiled by

ThomsonReuters, ChinaVenture, public news and PwC analysis unless

otherwise stated;

• ThomsonReuters and ChinaVenture record announced deals. Some of

these may not complete;

• The deal volume figures presented in this report refer to the number of

deals announced, regardless of whether the deal value is disclosed or not;

• The deal value figures presented in this report refer only to those deals

where a value has been disclosed (referred to in this presentation as

‘disclosed value’) ；

• ‘Domestic’ means China including Hong Kong, Macau and Taiwan;

• ‘Outbound’ relates to acquisitions abroad by mainland China companies;

• ‘Inbound’ relates to overseas companies acquiring domestic companies;

• ‘Strategic buyers’ refers to corporate buyers (as opposed to financial

buyers) that acquire companies with the objective of integrating the

acquisition into their existing business;

• ‘Financial buyers’ refers to investors that acquire companies with the

objective of realizing a return on their investment by selling the business

at a profit at a future date. These are mainly, but not entirely, PE and VC

funds;

• Disclosed deal amounts denominated in other currencies are converted

into USD amounts at the half year-end exchange rate for the period.

*Note: In this report, Agriculture & Livestock, Education and Diversified

Consumer Services are not included in the retail and consumer sector.

Foreword

7

Explanation of data shown in this presentation

2

Overview

7

• 2019 was a solid year for M&A - though deal volume

and disclosed transaction value were lower than 2018

by 5% and 15%, respectively, there were more mega

deals and the average size of disclosed transactions

increased. Domestic deals by corporate investors in

traditional retail, and outbound deals in food and

beverage, as well as hotel, dining and leisure, all saw

higher disclosed transaction values.

• Q1 2020 marked an abrupt downturn: a roughly 70%

decline in disclosed deal value and volume compared

to the same period in 2019. Nonetheless, there have

still been some significant deals, demonstrating

confidence in the R&C sector on the part of some

investors:

– PepsiCo Inc. announced its acquisition of Be &

Cheery (one of the largest online snack companies

in China) for US$705 million;

– Sequoia Capital China invested over Rmb1.2 billion

in Junlebao (君乐宝) to become its largest

institutional shareholder with a 15.26 percent stake;

– A 16.67% stake in Guyuelongshan (古越龙山) was

acquired for a total consideration of Rmb1.14 billion

(equity value around Rmb6.85 billion) by Shenzhen

Qianhai Furong Asset Management Co., Ltd. (深圳

市前海富荣资产管理有限公司) and Zhejiang Yingjia

Tech Co Ltd. (浙江盈家科技有限公司) ;

– Heytea has completed round D financing from

Hillhouse and Coatue, valuing it at Rmb16 billion;

– Perfect Diary also completed a new round of

financing from Hopu and Tiger Capital China,

valuing it at US$2 billion.

• Looking forward, we remain optimistic about the

medium-to-long-term prospects for deals in China‘s

retail and consumer sector. We expect deals to

rebound in 2020 once COVID-19 starts to come under

control. Deals will revolve around the themes of ‘new

retail’, ‘pursuit of health & wellness products’ and

‘consolidation / supply chain optimization’.

3

Summary of 2019 (1/4)

4

The impact of Government policy on

retail

Government policy guidance has had a significant impact

on the retail sector in the past year. Opinions issued by the

General Office of the State Council have touched on

developing the distribution and logistics industry and

promoting consumer spending. Together with the latest

round of reforms to individual income tax (which will boost

disposable income), these policies ensure that consumer

spending will continue to be one of the major drivers of

China’s economy.

China has been one of world’s largest consumer markets

in recent years, with domestic consumption an

increasingly important contributor to economic growth.

While the macroeconomic environment remains

challenging, the huge population base, with a growing

middle class, accelerating urbanisation and a varied retail

environment, promotes the development of consumer

choice and encourages consumers to trade up. A new

generation of consumers want convenient, healthy and

personalised products and services.

Closer integration of new and traditional

retail

The new retail business model is predicated on online and

offline integration. The growth of this model, along with

strong demand for high-quality products and foreign

brands, has provided greater impetus to M&A activity in

China's retail and consumer sector.

The accelerating transformation of traditional retailers such

as supermarkets has led to major transactions, including

Suning’s acquisition of Carrefour’s China business and

Wumart’s acquisition of Metro (China), with Dmalls

becoming Metro's technology partner in China. Traditional

retail and e-commerce have seen deepening integration of

their supply chains, facilitating the development of an

omni-channel consumer proposition.

Fresh food is a key focus, with Tencent and Meituan

Capital completing their investment in Yipien.Fresh so that

they can each bring their strengths to the supply chain. We

expect such online and offline integration to continue and

deepen further.

Outbound deals to acquire overseas

brands and to expand business

footprints

Online retailers continue to go global in their search for

quality targets worldwide. They are acquiring good foreign

brands and market access through outbound deals to

enhance their product offering. The total value of outbound

transactions in 2019 was similar to 2018, but volume was

up 19%. Major deals included CK Hutchison’s acquisition

of Greene King, a British brewery and pub operator, Ctrip’s

investment in MakeMyTrip, the largest tourism website in

India, and Mengniu Dairy acquiring Bellamy, an Australian

milk powder brand. Chinese enterprises are growing their

global footprint and expanding their overseas supply

chains through such deals.

As trade tensions between China and the United States

escalate, more Chinese retailers and consumer goods

enterprises are looking at other developed markets for

acquisition targets. Asia, Europe and Oceania are the

most popular target markets for Chinese buyers at this

stage.

Despite market headwinds, PE

investors remain active

Amid ongoing economic and political uncertainties, private

equity investors have been cautious, as evidenced by the

reduction in deal volumes (notwithstanding mega

transactions such as HillHouse Capital’s acquisition of

Gree Electric Appliances).

But while there was an overall decline in private equity

transactions in 2019, PE investments in online retail, hotel,

dining and leisure rose steadily, reflecting a growing focus

on ‘new retail’. PE investments represent a

disproportionately high share (84%) of online retail.

5

Review of M&A

in China’s retail

and consumer

sector in 2019

Average size

of transaction

Affected by mega

transactions, the average

transaction value in 2019

was approximately US$83.5

million, compared with

US$74.4 million in 2018 —

13% increase

Main

businesses

The most popular

businesses for investment

and financing are mainly

where consumers upgrade

their spending, such as

online retail, hotel, dining

and leisure.

Deals size

The scale of transactions

disclosed in 2019

reached US$49.7 billion,

compared with US$58.6

billion in 2018 — 15%

decrease

Major

investors

Financial investors’ (PE

funds) domestic deals are

still the main investments,

followed by domestic

corporate and outbound

deals.

Deals volume

976 M&A transactions

occurred in 2019,

compared with 1032 in

2018 — 5% decrease

Overseas

investment

regions

More than 65% of

overseas investment

occurred in developed

markets in Europe (UK,

Germany, France) and

parts of Asia (e.g. India).

Outbound

deals

The total volume of

outbound transactions in

2019 was 113, up from

95 in 2018 — 19%

increase

Mega deals

In 2019, there were 17

deals with a value over

US$500 million, for a total

value of approximately

US$24.3 billion (14

transactions in 2018, with

a value over US$14.1

billion)



6

US$ in billions US$ in millions

*Note: Outbound deals also include outbound investment from financial investors; as some transactions have undisclosed value, the transaction value cannot be

compared directly with M&A deal volume in next graph.

Source: Thomson Reuters, Investment China and PwC analysis

No. of transactions

*Note: Outbound deals also include outbound investment from financial investors; as some transactions have undisclosed value, the deal volume cannot be

compared with disclosed value in previous graph.


Size of China M&A Deals in R&C (2016 to 2019)

Number of China M&A Deals in R&C (2016 to 2019)

16 10

14 12

16

10 8

8

9

8 12

8

13

3

6

9

5

4

11

4

7

4

8

9

89.9

75.3 74.4 83.5

-

10

20

30

40

50

60

70

80

90

100

-

10

20

30

40

50

60

70

2016 2017 2018 2019

$ 64.8 billion

$ 39.6 billion

$ 58.6 billion

$ 49.7 billion

314

175 256 252

287

228

214 161

166

124

187

157

63

82

142

163

114

117

135

127

65

58

98

116

-

200

400

600

800

1,000

1,200

2016 2017 2018 2019

1,009

784

1,032976

12%

7%

20%

13%

24%

24%

Share of total

18%

9%

18%

15%

15%

25%

Share of total

2016

2019

7%

11%

7%

16%

28%

31%

Share of total

2016

2019

Sport leisure and textiles


12%

13%

17%

16%

16%

26%

Share of total


7

2019 deal size by subsector


2019 deal volume by investor type

7%

16%

15%

9%

13%

84%

30%

20%

58%

33%

8%

50%

62%

31%

50%

1%

4%

3%

2%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Online retail

Traditional retail

Food & beverage

Hotel, dining and leisure

Textiles and garments

Outbound deals Domestic deals by financial investors Domestic deals by corporate investors Inbound deals


3%

1%

2%

2%

26%

13%

13%

10%

12%

36%

35%

33%

40%

51%

27%

39%

38%

30%

26%

8%

13%

14%

17%

11%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Online retail

Traditional retail

Food & beverage


Textiles and garments

> 1 bn 100-1,000 m 10-100 m 1-10 m <1 mUS$



The impact of COVID-19 on China’s retail and consumer sector (1/2)

Overview

Since COVID-19 was first detected at the end of 2019, it has dominated global attention due to high rates of

transmission, its severity and the lack of therapeutic drugs or vaccines. The Chinese government took strong measures

to control it in a short period, including extending the Spring Festival holiday, limiting the flow of people in the epidemic

area, and encouraging enterprises to work flexibly so as to reduce the further spread of the virus.

Recently, the epidemic has been brought under control in China, with most cities having returned to pre-epidemic

normalcy, but they are still on the alert for imported cases, given its rapid spread overseas.

The epidemic has transformed online consumer

behaviour. Online penetration and home delivery are

expected to increase rapidly, with the leading

businesses further expanding their market share. At

the same time, changes in grocery shopping

frequency (e.g. stocking up to minimise contact) and

type have increased the basket price, which is

expected to solve the pain point of high distribution

costs to improve the profitability of online retailers.

The short-term impact of the

epidemic on physical shops

is expected to be

considerable, particularly for

luxuries or treats. After the

epidemic, traditional retail in

multiple sectors has

rebounded to close to pre-

epidemic levels. The

epidemic has accelerated

the pace of online and offline

integration and the

development of multi-

channel propositions.

The epidemic has had a short-term

impact on the gift segment and premium

focused F&B, such as tobacco and

alcohol, but a limited impact on meat,

convenience foods, seasonings, and

dairy products.

Traditional

retail

Food and

beverage

Hotel,

dining and

leisure

Online retail

Retail & consumer

sectors

Reduced movement of people during the

epidemic, suspension of domestic tour

groups and the closure of places for

social functions have had a great impact

on the hotel, dining and leisure sectors.

With their large fixed costs, small and

medium-sized hotels and restaurants are

facing severe challenges.

8

The impact of the epidemic on deals

Online and traditional retail

After the epidemic, online consumer habits are expected to

gradually penetrate into second and third tier cities. Greater

integration between online and traditional retailers will

generate deals activity in the short term.

During the crisis, weaknesses were evident among some

players (e.g. delivery / supply chain management). As

online retail becomes more competitive, the big question

will be how to better analyze consumer behavior through

data analytics and precise segmentation. Offline players

who have experienced significant growth in online demand

but struggled with fulfilment may want to develop their

omni-channel offering. Such traditional retailers who

achieve a tech-enabled transformation may be highly

favored by investors.

9

The impact of COVID-19 on China’s retail and consumer sector (2/2)


The hotel and dining sectors were the hardest hit in this

epidemic, with many facing cash flow challenges and some

smaller players struggling to survive. Sectors such as on-

premises dining, entertainment, tourism, and discretionary

spending on luxury products will continue to be under

pressure. We can expect a ‘flight to quality’ favouring the

strongest, and possibly leading to market consolidation.

Food and beverage

The short-term impact of the epidemic will be conducive to

industry consolidation. For example, leisure / health foods

with online channels such as Three Squirrels (三只松鼠)

standing out in the epidemic. The leading brands are

expected to increase their domination.

Consumer-led growth will fuel deals

After rapid growth in 2018, deal activity in 2019 was steady

despite market uncertainty. Given this context, we maintain

a long-term optimistic view for deals in China's retail and

consumer sectors.

Amid global economic uncertainties and Sino-US trade

tensions, China's economy will depend more and more on

consumer-led growth. In the medium-to-long term, this will

continue to drive deals growth.

The ‘Black Swan’ event of the epidemic in early 2020 hit

the hotel, dining and leisure sectors relying on offline

services, as well as traditional retail sectors selling

discretionary products. They have all faced severe

challenges, including liquidity risks. We expect businesses

in this sector to seek equity financing in the second half of

2020. The epidemic will also speed up the integration of

online and offline retail and encourage investment in the

merger of new and old formats of retailing. The epidemic

disrupted people’s lifestyles. Some may not return to their

old ways, with an impact on the long-term development of

the retail and consumer sector.

Strategic alliance with domestic

investors

Traditional offline retailers will continue to cooperate with

leading domestic Internet firms to increase supply chain

capacity and resilience, improve their logistics and overall

consumer experience, and meet the demands of a new

generation of consumers seeking to go upmarket. In this

environment, we expect traditional retail, food and

beverage, hotel, dining and leisure to be hot sectors for

domestic strategic investors in 2020.

Inbound deals from overseas

strategic investors to facilitate their

transformation in China

Despite economic uncertainties, China continues to be one of

the most important consumer markets in the world. Overseas

strategic investors will continue to focus on the Chinese

market and realise their China strategies through closer

cooperation with local businesses. Searching for digital /

omni-channel players and wellness products will help

overseas investors to transform in China as well as

potentially to export some of these products and business

models overseas and diversify their product portfolios. For

example, in the first quarter of 2020, PepsiCo Inc. announced

its acquisition of Be & Cheery, one of the largest online snack

companies in China, for US$705 million.

We expect inbound deal activity to rise steadily after the

pandemic passes, especially in products and industries

that meet the needs of the middle classes.

10

Outlook for 2020 (1/2)

Outbound deals seeking quality brands

and products

We expect outbound deals activity in 2020 to increase

once COVID-19 has been contained:

• The COVID-19 outbreak at the beginning of 2020

affected cross-border mobility and impacted outbound

deals activity in the short term;

• However, in the medium to long term, i.e. once the

epidemic impacts fade away:

– Chinese retail and consumer goods companies and

brand owners (especially private enterprises) will

continue to acquire overseas quality brands to meet

the rapidly growing middle class demand in China.

Through deals, domestic enterprises will acquire

overseas upstream assets and introduce high-

quality brands and products for the Chinese middle

class.

– The private enterprises represented by Haidilao (海底捞) will go global, continue their overseas

expansion and integrate into local markets by

acquiring mature overseas brands.

– The signing of the first phase of the Sino-US trade

agreement and the ongoing Brexit negotiations have

provided more opportunities for Chinese outbound

deals. However, in recent years, political sensitivity in

some countries to large cross-border transactions has

been high. This will continue to create uncertainty for

outbound deals by Chinese retail and consumer

firms.

– There will be a shift towards deals that can secure

upstream raw material and health & wellness products,

rather than more discretionary products.

Financial investors (private equity

funds) more active in high-growth /

innovative sectors

Financial investors will be more active in 2020:

• In 2019, PE investments in China fell amid investor

caution. However, as new policies continue to

encourage investment in innovative sectors (e.g.

facilitating an exit in China’s Science and Technology

Innovation Board (科创板)), financial investors'

enthusiasm for domestic targets will likely be restored.

At the same time, the gradual return of domestic market

valuations to a more reasonable range will encourage

financial investors to be more practical about domestic

targets;

• In addition to deals in China, financial investors are

increasingly involved in outbound deals, including in

cooperation with strategic investors;

• PE funds will continue to focus on high-growth online

and new retail, dining and leisure, and other consumer

upgrade sectors.

The recent Luckin Coffee incident will lead to more

stringent due diligence and will heighten doubts about new

business models. If lack of trust impairs the stock

performance of Chinese players in the US, they may

consider delisting and relisting in HK or Mainland China.

Financial investors will play a significant role in this

process. The ability of new economy businesses to

demonstrate profitable growth and a sustainable path to

profitability will command a premium.

We remain optimistic about medium-to-long-term prospects for deals in China's retail and consumer sector.

Outlook for 2020 (2/2)

11

Review of deals in

2019 by segment

12

1. Market activity

Online retail is one of the most active segments for transactions. Both the volume and value in 2018 and 2019 surpassed traditional retail. Overall activity in 2019 was broadly unchanged from 2018, and the disclosed transaction value was down 15% from the prior year.

2. Investors

Financial investors are the main drivers of online retail transactions. In 2019, the value of domestic transactions from financial investors reached US$7.39 billion, similar to previous years. The target companies for financial investment in 2019 were concentrated in e-commerce in used cars, daily necessities, and health and pet sectors.

3. Deal size

The average deal size by financial investors has remained stable — concentrated in the million and tens of millions of USD. Outbound deals by Chinese companies averaged USD10 million. The proportion of transactions above USD100 million has increased since 2H2018.

4. Major transactions

Mega deals of more than USD1 billion in 2019 came from Alibaba’s acquisition of NetEase Koala, and new financing

1Online retail

Brief review of deals for online retail in 2019

Online retail deals value（2016 to 2019）

*In 2016,there were mega transactions among domestic companies — JD acquired YHD; MOGU Inc. acquired Meilishuo and privatization of Dangdang Network.

Note: Outbound deals also include outbound investment from financial investors; as some transactions have undisclosed value, there is no corresponding

relationship with the volume of transactions.


7,661 7,174 7,771 7,389

6,927

1,245

2,883 2,355

48 669

1,194

1,272

3,408

1,799

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2016 2017 2018 2019

Domestic deals by financial investors Domestic deals by corporate investors Inbound deals Outbound deals

Total value: $ 12.21 billion

Volume: 252

*

US$ in millions


Volume:314


Volume:175


Volume: 256

13

on CARS and JD. At the same time, Toyota, as an overseas investor, invested US$600 million in cooperation with Didi in the field of smart mobility services.

5. Outbound deals

With a slowdown in overall economic growth, Chinese internet companies have sought to increase their market share through overseas acquisitions. Under the influence of Alibaba’s US$2 billion investment in Southeast Asian e-commerce platform Lazada and other large transactions in 2018, the volume of outbound deals by privately-owned enterprises (POEs) and financial investors increased by 38% compared to the previous year but the disclosed transaction value decreased by 47% in 2019.

6. Key overseas markets and targets

Asia (e.g. India) continues to be the key strategic region for financial investors and Internet giants. The target companies for outbound deals in 2019 were concentrated among the logistics, travel and e-commerce sectors.

7. IPO volumes

A-share markets (2)；Hong Kong Stock Exchange (1)；U.S. stock markets (4)

Brief review of deals for traditional retail in 2019

1. Market activity

Traditional retail is second only to online in terms of deals

volume, but it has been decreasing year after year since

2016. The volume of deals in 2019 dropped by a further

25% compared to 2018. The value of transactions

disclosed in 2019 declined slightly from 2018, due to the

impact of two large transactions that year.

2. Investors

Deals between domestic companies and domestic financial

investors still dominate this segment, accounting for more

than 80% of deals in traditional retail. In 2019, the targets

for deals among domestic companies were concentrated in

the supermarket, food and edible oil sectors and the

automotive specialty retail sector; the targets for financial

investments were concentrated in the specialty retail

sector, such as furniture and domestic appliances.

3. Deals size

Transactions were mostly small and medium-sized, but there

were three very large transactions of more than US$500

million in 2019.


Online retailers continue to seek and incorporate offline

channels. Typical transactions included Alibaba's stake in

Red Star Macalline and JD.com's stake in Jiangsu Five

Star. At the same time, traditional retail has accelerated

the transformation of supply chain and product categories,

and flagship projects such as Wumart and Dmall’s

acquisition of Metro China, Suning’s acquisition of

Carrefour (China) have emerged.

5. Outbound deals

Private companies continued to dominate outbound deals

in traditional retail. Due to uncertainties such as more

stringent supervision and government approval

procedures, the outbound deals market continues to slow.

6. Key overseas markets

Asia (e.g. Japan) and Europe (e.g. UK) have become the

key areas for outbound deals by Chinese retailers.

7. IPO volumes

A-share markets (1); Hong Kong Stock Exchange (5); U.S.

stock markets (3)

Traditional retail deal value（2016 to 2019）




2Traditional retail

4,028 4,583

2,464 1,732

7,323

3,380

4,559 5,108

579

210

4 373

3,913

2,301

769 398

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2016 2017 2018 2019


Total value: $15.84 billion

Volume: 287


Volume: 228


Volume: 214Total value: $7.61 billion

Volume: 161

14

US$ in millions

Brief review of deals for food and beverage in 2019

1. Market activity

After excluding the impact of large deals such as Heineken's

acquisition of China Resources Snow Beer, the value of deals

in the food and beverage segment in 2019 was similar to

2018, but volume was down 16%.

2. Investors

Deals from domestic companies and financial investors

accounted for more than 80% of the transaction volume in

this segment. In 2019, major outbound deals pushed up

the industry's overall disclosed transaction value; the

targets of deals were concentrated in the dairy, spirits (i.e

金徽酒) and Fast Moving Consumer Goods (FMCG)

sectors.

3. Deals size

Deals among domestic enterprises and financial investors

are mostly small and medium-sized.


Private equity funds acquired Godiva’s businesses in

Japan, South Korea, Australia and New Zealand in 1H19.

In addition, Mengniu Dairy’s acquisition of Bellamy will

open up the organic baby food business for Mengniu and

promote its penetration into China's infant formula market.

At the end of the year, COFCO announced that it plans to

de-list China Agri Holdings from the Hong Kong Stock

Exchange in the interests of flexibility.

5. Outbound deals

Private enterprises have always dominated outbound

deals in the food and beverage segment. They seek to

obtain high-quality overseas brands and channels through

deals. Private enterprises were particularly active in

overseas transactions in the food and beverage segment

in 2019. There were five transactions of more than

USD100 million and the value of deals doubled from 2018.


Europe (e.g. UK, France and Spain) and Australia were

the most active regions for Chinese food and beverage

companies’ outbound deals in 2019.

7. IPO volumes

A-share markets (8); Hong Kong Stock Exchange (2); U.S.

stock markets(1)

Food and beverage deal value（2016 to 2019）

The inbound M&A of foreign investors in 2018 were mainly Heineken's acquisition of 40% of China Resources Snow Beer for HK $ 24.35 billion and the acquisition

of Sichuan Shuijingfang.




3Food and beverage

4,470

629

2,162 1,165

2,570

5,662 3,916

2,932

353

39

4,108

146

1,117 2,087

1,694

3,344

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2016 2017 2018 2019



Volume: 166


Volume: 124


Volume: 187


Volume: 157

15

US$ in millions

4Hotel, dining and leisure

Brief review of deals for hotel, dining and leisure in 2019

1. Market activity

The rapid growth of China’s middle class has led to consumers upgrading their spending. Although there were no mega deals like those in 2016*, transaction activity increased significantly in the hotel, dining and leisure segment in 2019. The value and volume of transactions increased by 49% and 15% respectively compared to 2018. In addition, in 2019, there were two mega transactions over US$1 billion, which pushed up the transaction value of the hotel, dining and leisure sector.

2. Investors

Financial investors have become dominant players in overseas acquisitions in the hotel, dining and leisure segment. 94 domestic transactions in 2019 involved financial investors (accounting for 58% of total transaction volume), compared with 93 in 2018 and 42 in 2017.

3. Deals size

The proportion of transactions worth over US$10 million from financial investors has increased. The volume of outbound deals by private enterprises is mainly medium and large in size.


In 2019, CK Hutchison Holdings acquired British brewery and pub operator Greene King, and Ctrip reached a cooperation agreement with MakeMyTrip in India to strengthen its outbound travel business.

5. Outbound deals

In 2019, private enterprises were particularly active in overseas transactions, with transaction volumes increasing by 150% year on year. The targets of deals were scattered among the hotel, dining and tourism sectors.


Outbound deals were concentrated mainly in Asia (e.g. India) and Europe (e.g. UK,). While Chinese enterprises’ outbound deals have made a shift from the United States to Oceania amid the Sino-US trade war, we saw a number of diversified acquisitions of catering companies such as Haidilao in the United States.

7. IPO volumes

Hong Kong Stock Exchange (7); U.S. stock markets (1)

Hotel, dining and leisure deals value（2016 to 2019）

Note: Outbound deals also include outbound investment from financial investors; as some transactions have undisclosed value, there is no

corresponding relationship with the volume of transactions.


*For example: Private equity fund Ocean Imagination acquired Qunar for USD 4.59 billion and Anbang Insurance Group acquired US Strategic Hotels for USD 6.5 billion.

4,900

188 2,211

1,573

1,106

2,445

803 948

0

-3 1,086

6,686

582

2,820

5,098

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2016 2017 2018 2019



Volume: 63


Volume: 82


Volume: 142


Volume: 163

0

16

US$ in millions

Brief review of deals for sport leisure and textiles in 2019

1. Market activity

After excluding the impact of mega outbound deals in 2018*, the transaction value of deals in the sport leisure and textile segment in 2019 was at a level similar to that in 2016 and 2017.

2. Investors

The value of deals among domestic enterprises declined, while that from financial investors reached a peak in 2018, falling by 38% and 24% in 2019, and the volume of transactions was down 14% and 6%, respectively. In 2019, the targets of financial investors' domestic investment were mainly in the home textiles and clothing sector, while the targets of deals among domestic enterprises were concentrated in the garments sector.

3. Deals size

Deals in the sport leisure and textiles segment between financial investors or domestic companies are mainly in the range of tens of millions of USD. Except for one very large transaction in 2H18, mega deals of more than US$1 billion were rare.


The rapid growth of the middle class has led to consumers moving upmarket. In 2H18, Anta spent more than US$5 billion to acquire the Finnish sports brand Amer Sports. In 2H2019, Anta sold some of Amer Sports' equity and introduced strategic partners such as Sequoia Capital. In 2019, large-scale transactions over US$200 million included Xtep’s acquisition of E-land Footwear.

5. Outbound deals

Private enterprises were the absolute driving force in outbound deals in this segment. 2019 saw 14 outbound deals by private enterprises and 3 outbound deals by financial investors.


Europe (e.g. Germany and France) and America are the most sought after regions for outbound deals in the sport leisure and textiles segment.

7. IPO volumes

Hong Kong Stock Exchange (7)

Sport leisure and textiles deals value（2016 to 2019）




5Sport leisure and textiles

*Mainly due to Anta's acquisition of Finnish sports brand Amer Sports for more than US$5 billion

US$ in millions

2,012 1,393

2,906 1,808

2,001 1,920

2,156

1,638

389 681

49

44

158 254

5,615

776

-

2,000

4,000

6,000

8,000

10,000

12,000

2016 2017 2018 2019



Volume: 114


Volume: 135


Volume: 127


Volume: 117

17

18

Source: Public information, Thomson Reuters, Investment China and PwC analysis

NO. Target

company

Industry Investors Publication

date

Deal value

（USD bn）Description

1 Gree Electric

Appliances

Consumer

goods

Hillhouse

Capital

2019.10.29 5.92 In the context of the reform of

state-owned enterprises, Hillhouse Capital

spent about Rmb41.7 billion to acquire a

15% stake in Gree Electric Appliances,

becoming the largest shareholder.

2 Greene King Hotel, dining

and leisure

CK Hutchison

Holdings

Limited

2019.08.19 3.2 CK Hutchison Holdings proposed a ₤2.7

billion bid for British pub operator Greene

King, which is listed on the London Stock

Exchange. Greene King is a leading brewery

and pub operator with over 2,700 pubs,

restaurants and hotels in England, Wales

and Scotland.

3 Metro

(China)

Traditional

retail

Wumart

Group

2019.10.11 2.09 Wumart Group and Multipoint Dmall acquired

80% of Metro's China at a valuation of 1.9

billion Euros. Wumart Group transforms its

new retail and further expands its business

through the operation of digitalization, new

store openings and other growth initiatives.

Metro is undergoing new retail

transformation, providing online and offline

integrated digital retail solutions, which is

exactly what Metro (China) needs.

4 NetEase Koala Online retail Alibaba

Group

2019.09.05 2 Alibaba Group acquired NetEase's cross-

border e-commerce platform Koala for $2

billion. NetEase Koala is to merge with Tmall

International, and the Koala brand will

continue to operate independently.

5 CARS Online retail SoftBank

Vision Fund

2019.02.27 1.5 CARS, the parent company of Guazi.com

and Maodou.com, completed a new round of

financing of US$1.5 billion. The investor is

Vision Fund. After the completion of this

series-D funding, CARS is valued at more

than $9 billion, ranking first in the automotive

consumer services sector.

6 MakeMyTrip Ltd Hotel, dining

and leisure

Ctrip 2019.04.26 1.4 Ctrip has reached an agreement with South

Africa's largest media group, Spas Naspers,

to exchange shares of Makemytrip, an Indian

online travel company held by Naspers, and

become the largest shareholder of

Makemytrip. This is also a big step for Ctrip

to penetrate into the Indian travel market.

7 China

Agri-Industries

Holdings Limited

Food and

beverage

COFCO Hong

Kong

2019.11.28 1.14 COFCO plans to de-list China Agri-Industries

Holdings from Hong Kong Stock Exchange.

China Agri-Industries Holdings is engaged

mainly in the processing and sales of

oilseeds, rice, wheat and beer raw materials.

It has a wide range of products and has

established well-known national brands such

as Fulinmen and Xiangxue.

Deals valued at over US$500 million in 2019 (1/3)

19



NO. Target

company


date

Deal value

（ USD bn）Description

8 JD Health Online retail Citic

Capital,CICC

and Baring

Asia Private

Equity

2019.05.10 1 JD Health received more than USD 1 billion in

Series-A funding, led by a number of

domestic and foreign investment companies.

Relying on the strengths and resources of JD

Group, JD Health will gradually improve the

“Internet + medical health” proposition based

on the existing four business lines of

pharmaceutical retail, pharmaceutical

wholesale, Internet medical treatment, and

healthy cities.

9 Godiva

Chocolatier

Food and

beverage

MBK Partners 2019.02.20 1 Godiva granted MBK Partners a permanent

operating license to sell the retail and

distribution businesses in Japan, South Korea,

Australia, and future development rights to the

New Zealand market to MBK Partners. The

business covers finished packaging products, e-

commerce, travel retail for Japan and South

Korea, and more than 300 physical stores.

10 Bellamys Food and

beverage

Mengniu Dairy 2019.09.16 0.96 Bellamy is a leading global manufacturer of

organic infant formula; it is Australia's number

one brand, and the products are well received

by consumers in the Asia-Pacific region.

Through this acquisition, Mengniu will

effectively strengthen the high-end infant

formula business, and will also help Bellamy's

China business grow healthily, providing

better products and services for domestic

consumers.

11 Carrefour

(China)

Traditional

retail

Suning.com 2019.06.23 0.69 Suning.com bought 80% of Carrefour China

for Rmb4.8 billion. Suning will carry out a

comprehensive digital transformation of

Carrefour stores and build an integrated

online and offline supermarket shopping

scene. The two sides will continue to optimize

and share warehousing, logistics, personnel

and other aspects to further supplement the

logistics warehousing and distribution

capacity of Suning FMCG.

12 Red star

Macalline

Traditional

retail

Alibaba Group 2019.05.05 0.64 Red Star Holdings successfully issued

exchangeable bonds, which were fully paid

by Alibaba for Rmb4.359 billion. At the same

time, Alibaba acquired 3.7% of Red Star

Macalline in Hong Kong stocks.

20



NO. Target

company


date

Deal value

（ USD bn）Description

13 Luckin Coffee Hotel, dining

and leisure

Louis Dreyfus

Company

2019.05.17 0.61 Louis Dreyfus Company(LDC), the world's

third largest and France's largest food

exporter, reached an agreement with Luckin

Coffee to set up a joint venture to build and

operate a coffee roasting plant. After the

completion of Luckin Coffee's IPO, LDC will

purchase a total of $50 million of Luckin’s

class A common stock in a concurrent private

placement at the public offering price.

14 Didi (Beijing

Xiaoju

Technology

Co., Ltd.)

Online retail Toyota 2019.07.25 0.6 Toyota and Didi reached an agreement to

cooperate in smart mobility services. The new

joint venture will buy Toyota cars and lend them

to drivers. Toyota dealers will be responsible for

car maintenance with their major foothold in the

Chinese market.

15 Junlebao Food and

beverage

Penghai Fund,

Jungan

Management

2019.07.01 0.58 Mengniu Dairy sold all its equity in Junlebao,

which holds 51% of its equity, and

concentrated resources to accelerate the

expansion of star products and make high-

end efforts.

16 Emerald Grain

Pty Ltd

Food and

beverage

Xiwang Group 2019.05.14 0.5 Xiwang Group and Sumitomo Society of Japan

signed a memorandum on the joint acquisition

of Australian Emerald Grain Pty Ltd. The project

received a total investment of US$500 million,

and Xiwang Group plans to hold an 80% share.

The plan is to hit 8 million tonnes of grain trade

within three years. Relevant varieties will be

imported according to China's needs; Xiwang

Group will import Australian high-quality grains

into the country through its domestic network.

17 Aihuishou

(Shanghai

Yueyi Network

Information

Technology Co.,

Ltd.)

Online retail JD.com

Tiantu Capital,

Morningside

Venture

Capital,

Tiger Fund,

Gen Brigde

Capital, Fresh

Capital

2019.06.03 0.5 JD’s second-hand trading platform "Paipai"

will be strategically merged with digital

recycling platform “Aihuishou". At the same

time, JD led a new round of financing of more

than US$500 million. Previous shareholders,

Tiantu Investment, Morningside Venture

Capital, Tiger Fund, Qicheng Capital, and

Qingxin Capital successively participated in

the investment.

21

Data collection methods and disclaimers

Statistics contained in this presentation and the

press release may vary from those contained in

previous press releases. There are three reasons for

this: ThomsonReuters and ChinaVenture historical

data is constantly updated as deals are confirmed or

disclosed;

PricewaterhouseCoopers has excluded certain

transactions which are more in the nature of internal

reorganisations than transfers of control; and

PwC’s previous data came from a different source.

Transactions include:

• Acquisitions of private/public companies

resulting in change of control

• Investments in private/public companies

(involving at least 5% ownership)

• Mergers

• Buyouts/buy-ins (LBOs, MBOs, MBIs)

• Privatizations

• Tender offers

• Spinoffs

• Split-off of a wholly-owned subsidiary when

100% sold via IPO

• Divestment of company, division or trading

assets resulting in change of control at parent

level

• Re-capitalisation

• Joint Venture buyouts

• Joint Ventures

• Receivership or bankruptcy sales/auctions

• Tracking stock

Transactions exclude:

• Property/real estate for individual properties

• Rumoured transactions

• Options granted to acquire an additional

stake when 100% of the shares have not

been acquired

• Any purchase of brand rights

• Land acquisitions

• Equity placements in funds

• Stake purchases by mutual funds

• Open market share buyback/retirement of

stock unless part of a privatization

• Balance sheet restructuring or internal

restructuring

• Investments in greenfield operations

• Going private transactions

• Reverse takeovers

Contact us

Michael Cheng

PwC Asia Pacific & Hong Kong/China Consumer Markets

Leader

+852 2289 1033

[email protected]

This content is for general information purposes only, and should not be used as a

substitute for consultation with professional advisors.

© 2020 PricewaterhouseCoopers Consultants (Shenzhen) Limited. All rights reserved.

PwC refers to the PwC network and/or one or more of its member firms, each of which

is a separate legal entity. Please see www.pwc.com/structure for further details.

Ken Zhang

Deals Advisory Partner

PwC China

+86 (21) 2323 3120

[email protected]

Waldemar Jap

Consumer Markets Deals Lead Partner

PwC Hong Kong

+852 2289 1892

[email protected]

Jennifer Ye

China Consumer Markets Leader

PwC China

+86 (21) 2323 3325

[email protected]

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