China 2006 M&A deals by foreign acquirers 21.63 bln usd; retail in focus- report

BEIJING (XFN-ASIA) - Merger and acquisition deals in China involving foreign acquirers totaled 21.63 bln usd, with deals for retail and consumer-oriented businesses growing sharply with the easing of restrictions on foreign investment in the sector, The Standard reported, citing Thomson Financial.

Many Western firms are also attracted to retailers as a play on China's rapidly growing middle class, the Hong Kong newspaper added.

In the first 11 months of 2006, the consumer and retail sector saw deals worth around 2.99 bn usd, up more than 88 pct on the previous year, the report said.

In December 2004 China removed many restrictions on investment in China's retail sector which allowed foreign firms to operate stores in any city without having to take on a joint-venture partner, the newspaper said.

Among the companies concluding deals were US electronics retailer Best Buy (nyse: BBY - news - people ), which acquired Jiangsu Five Star Appliance for 180 mln usd, and Wal-Mart (nyse: WMT - news - people ), which agreed to acquire Trust-Mart for 1 bn usd.

Trust-Mart, the Taiwan-backed supermarket chain, operates 100 supercenters in China while Wal-Mart runs 60 of its own stores.

Other investments included British retailer Tesco's increase of its stake in Hymall to 90 pct from 50 pct, and the purchase by Home Depot (nyse: HD - news - people ), the world's largest home improvement retailer, of 100 pct of Tianjin-based HomeWay, the newspaper said.

(1 usd = 7.8 yuan)

fergus.naughton@xinhuafinance.com