By Kane Wu and Julie Steinberg

The pace of big Chinese takeovers abroad is slowing as buyers contend with rules tightening the flow of money out of the country and increased government scrutiny at home and overseas.

Bankers say many of the record-breaking $225 billion in overseas acquisitions Chinese companies announced last year are stalled by financial or regulatory hurdles -- including the country's biggest-ever deal, China National Chemical Corp.'s $43 billion bid for Syngenta AG , a Swiss seed and pesticide maker. European regulators this month extended the deadline for their review ofChemChina's bid a second time, to April.

More Chinese acquirers are backing out of deals. While Chinese firms announced more than double the amount of overseas acquisitions last year versus the previous, the value of deals withdrawn in 2016 was up around sevenfold, to $38.39 billion, according to Dealogic. The average number of days it took a Chinese buyer to complete an overseas deal in 2016 edged upward throughout the year, with November and December notching the highest levels, at above 140 days, according to Dealogic.

A major factor behind the slowdown: stricter policing of overseas acquisitions by Chinese regulators to curb a flood of money leaving the country.

The resulting uncertainty about regulatory approvals has damped some investors' enthusiasm for overseas deals. "It is unmistakable that Chinese investors are far more cautious amid mounting uncertainties," said Fred Hu, chairman of Primavera Capital. Mr. Hu's Chinese private-equity firm is a prominent deal maker involved in last year's biggest U-turn: Anbang Insurance Group Co. dropping its $14 billion bid for Starwood Hotels & Resorts Worldwide Inc.

Mergers and acquisitions the world over go through cycles, and given the size, wealth and ambition of corporate China, financiers say the country's surge in overseas, or outbound, deals is likely not stopping, but taking a break.

Some well-connected Chinese acquirers are still striking smaller deals. Ant Financial Services Group, an affiliate of online shopping giant Alibaba Group Holding Ltd., clinched a deal Thursday to buy U.S. money-transfer provider MoneyGram International Inc. for $880 million . Valeant Pharmaceuticals International Inc. also agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million earlier this month.

"In the long run, the trend of China Inc. going global should not be affected" by the current foreign-exchange controls, said Wang Hongzhang, chairman of state lender China Construction Bank Corp., at a January event in Hong Kong. His bank offers financing for many Chinese outbound deals, including Anbang's Starwood bid.

For now, though, Chinese companies are increasingly anxious about deals abroad -- particularly the biggest, which get the most scrutiny.

Chinese regulators, including the Commerce Ministry and the country's top economic-planning agency, must now clear many outbound deals larger than $1 billion, as well as everything more than $10 billion, before companies can get approval to move funds offshore, according to people with knowledge of the matter and documents reviewed by The Wall Street Journal. Regulators also are retroactively examining many pending deals that had earlier been approved, causing delays, according to people familiar with the matter.

State-owned China Resources Beer (Holdings) Co. dropped out of an auction for Eastern Europe brewing assets being sold by Anheuser-Busch InBev SA NV in December, after China's economic-planning agency declined to approve its bid, according to people familiar with the situation. Representatives for China Resources and AB InBev declined to comment.

Meanwhile, Chinese deals continue to face scrutiny from overseas regulators. Australia this month said it will set up a new body to assess security risks of foreign investments, following a surge in Chinese bids to purchase everything from ports to electricity assets. Anbang's $1.57 billion acquisition of U.S. life insurer Fidelity & Guaranty Life has stalled for more than a year because the Chinese insurer hasn't provided enough detail on its ownership to satisfy state insurance regulators, people familiar with the matter said. One of these people said Anbang is in talks with New York regulators and plans to refile its application in the first quarter.

Many sellers are asking for money to be placed in offshore escrow accounts to ensure they get paid, a development that has become common in the past year, bankers and lawyers say. HNA Group deposited $500 million in a U.S. account as breakup fee for its $6.5 billion proposed purchase of a 25% stake in Hilton Worldwide Holdings Inc.

State-owned ChemChina already was grappling with a heavy debt load before it struck the Syngenta deal. Worries about those debt levels caused one Chinese state bank to pass on financing the bid, according to people familiar with the situation. ChemChina's Chairman Ren Jianxin tapped HSBC Holdings PLC and China Citic Bank International Ltd. to lead the $33 billion loan-financing effort. The lack of strong backing from big state lenders raised questions among investors over whether the deal had full support from Beijing.

A ChemChina spokesman declined to comment and declined to make Mr. Ren available for comment.

The deal was approved in August by the Committee on Foreign Investment in the U.S., or CFIUS, which scrutinizes deals for national-security risks and has blocked several high-profile Chinese deals during the past few years. In Europe, antimonopoly regulators are still combing through ChemChina's and Syngenta's assets to determine what may need to be divested after extending the deadline twice.

China's Commerce Ministry too has yet to give the nod, a person familiar with the matter said. It isn't clear whether the Chinese economic-planning agency is currently examining the deal.

"ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure," said a Syngenta spokesman.

Mr. Ren has been undeterred by the delays, telling people around him not to worry about the fate of the Syngenta deal, and that the current obstacles won't influence other potential deals, people familiar with the matter said.

--Lingling Wei, Leslie Scism and Natalia Drozdiak contributed to this article.

Write to Kane Wu at Kane.Wu@wsj.com and Julie Steinberg at julie.steinberg@wsj.com

(END) Dow Jones Newswires

January 27, 2017 19:39 ET (00:39 GMT)

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