Rio Tinto recommended China-backed Yancoal as the buyer of most of its Australian coal mines, rebuffing a surprise higher bid from Glencore earlier this month. Rio Tinto said in January that it was selling Coal & Allied to Yancoal Australia, majority-controlled by China’s Yanzhou Coal, for USD2.45 billion. But Glencore, which like Yancoal also operates several coal mines in Australia, offered USD100 million more for the assets in New South Wales state. Rio said it spoke to both parties but still favored Yancoal since the deal was expected to be completed faster due to greater funding and regulatory certainty. Yanzhou Coal is one of China’s largest mining groups by capitalization. Under the original proposal, Yancoal was to pay an initial sum of USD1.95 billion and the rest as deferred payments, but it will now make a single payment of USD2.45 billion, Rio said. Yancoal had already been given the green light by Australia’s Foreign Investment Review Board (FIRB), while the Glencore plan was subject to regulatory approval. Rio Tinto is selling Coal & Allied as part of a divestment drive which analysts expect will lead to a complete exit from the sector.

New mechanisms are needed to resolve disputes related to outbound investments of Chinese companies, experts in M&A said. The dispute resolution mechanism is at present almost entirely in the hands of Western countries. “Most of the cross-border investment in the countries and regions taking part in the Belt and Road Initiative is in infrastructure projects, which have long investment cycles and require large sums of money, so disputes will likely increase,” said Wang Guiguo, Director of the International Academy of the Belt and Road Initiative. The organization to be set up could be compared to the International Center for Settlement of Investment Disputes (ICSID), which is part of, and funded by, the World Bank Group.

China’s largest coal miner, China Shenhua Energy Co, and Guodian Technology and Environment Group, a coal-fired power firm, are reported to be in merger discussions. Their listed units halted share trading ahead of the announcement of a “significant event”. China is also considering merging two of its nuclear power giants, China National Nuclear Corp and China Nuclear Engineering Corp Group. Lin Boqiang, Dean of the China Institute for Energy Policy Studies at Xiamen University, warned that in addition to increased competitiveness in the international market as a result of the mergers, there might also be excessive concentration that damages domestic market competition. Shenhua had CNY1.04 trillion in total assets as of the end of April, including 83 gigawatt (GW) of power generating capacity. Guodian owned assets of CNY803 billion at the end of 2016. Coal still make up 70% of the 1,800 GW of power producing capacity in China. Emissions obligations under global treaties are compelling the Chinese government to reduce coal’s maximum share to 1,100 GW by 2020, or 55% of the country’s total power capacity. A merged entity between Shenhua and Guodian will potentially facilitate the closures of certain unprofitable coal plants.

The value of Chinese mergers and acquisitions (M&As) in Belt and Road economies more than quadrupled to USD9.9 billion in 2016 from USD2.3 billion in 2014. The energy, power and raw material sectors were the most popular targets among Chinese buyers, while U.S. companies aimed for deals in the finance sector, and the Japanese preferred the industrial and raw material sectors, according to a report by Thomson Reuters. Kazakhstan, Russia, Israel, Singapore and Egypt were the top M&A destinations for Chinese companies. The total value of M&As in Kazakhstan by Chinese companies from 2000 to 2016 totaled USD9.3 billion, accounting for 20.9% of the total value during the period. The report said compared with U.S. deals, the value of a single M&A transaction by a Chinese company is usually bigger. Guo Libo, Research Head of ChinaVenture Group, said Chinese companies’ mergers and acquisitions in Belt and Road economies will continue to be active this year with government support. “But attracting private capital and local capital to Belt and Road investments remains to be an issue,” Guo added, as reported by the China Daily.

Humanwell Healthcare Group and Citic Capital Partners are paying USD600 million to acquire the world’s No 2 condom maker, owned by Australia’s Ansell. The deal will give the two firms a ubiquitous condom brand, Jissbon, which sounds like “James Bond” in Chinese. Ansell is second only in terms of market share to Reckitt Benckiser, which owns the Durex brand in China. China is the fourth largest maker of condoms in the world, and its domestic market is predicted by American market researcher Reportlinker to witness significant growth.