China's Latest Export: Broken Buyout Deals

It isn't surprising that the company hasn't provided the requested information. Efforts to figure out Anbang's corporate structure or where its cash came from have so far failed to yield much clarity. This is the third proposed Anbang deal to run into trouble. First was its effort to buy Starwood Hotels & Resorts Worldwide Inc. After bidding up the price and threatening a rival deal, Anbang pulled out suddenly with little explanation.

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The failed deals are an embarrassment to Beijing, which wants its businesses and financial system to wield the same clout globally as its huge economy. They also highlight the contradictions in China that will keep that from happening.

The most obvious is the Chinese currency, the yuan. Chinese officials know that a weaker yuan will boost the country's economy, but signs of weakness have at times led to capital flight. In the past month, though, Beijing has been able to both devalue the currency to its lowest level in five years and stem capital flight. It's unclear if the busted deals were casualties of that effort.

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Despite the headlines, China succeeds in most of its deals. Of the 50 biggest overseas deals it has struck since the start of 2015, just five have been formally withdrawn while 19 are still pending. Companies globally are pulling out of deals at a record pace this year, with U.S. companies accounting for the top three scuttled mergers. But in those cases, the deals were canceled over objections by regulators or changes in tax laws, not unilateral decisions by the buyers.