King & Wood Mallesons

Asia-Pacific 100 position: 3

Relaxation of NDRC rules has immediate impact, but uncertainty remains if there is only ever one anointed Chinese bidder

By Jin Xiong, Paul Schroder and Edward Tudor

Developments in China’s Tsinghua Unigroup’s bid for HKSE-listed RDA Microelectronics show the immediate impact of December’s relaxation of outbound investment regulations in China. However, uncertainty remains around the application of the ‘one Chinese bidder’ policy.

Tsinghua Unigroup entered into a merger agreement with semiconductor producer RDA for $18.50 (£11.16) per American depository share in November 2013. The deal was struck between the parties despite the fact that the powerful National Development and Reform Commission (NDRC) had already granted preliminary approval to rival state-owned bidder Shanghai Pudong Science and Technology Investment (SPSTI) for its September offer of $15.50 per RDA American depository share.

Reports from China at the time suggested that NDRC was unlikely to grant preliminary approval to Tsinghua even though Tsinghua expressed confidence it would secure NDRC approval and committed to pay RDA a $70m termination fee if it could not. However, on 2 December, in a move designed to reduce and decentralise approval powers, the Chinese government announced that only investments over $1bn or involving sensitive countries, regions or industries will require NDRC approval. Investments valued between $300m and $1bn will still need to file with NDRC and obtain a filing receipt…

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