Xi tests China's reach by blocking Meta deal that's already done

(Bloomberg) -- China has sought for years to exert influence over business deals beyond its home turf. Still, its decision to press Meta Platforms Inc. to unwind a $2 billion acquisition of AI startup Manus marks a step unlike anything it’s tried before.

The country’s powerful state planner decreed Monday that the deal must be canceled — four months after it was sealed. In doing so, it’s targeting a US tech juggernaut with little to no business operations in China and a startup that, while originally from China, had legally moved to Singapore.

The two companies have spent months operating on the assumption that the deal was wrapped up. The startup’s employees have already moved into Meta offices in Singapore, while its executives have joined the US firm’s high-profile AI team. Investors in Manus, including Tencent Holdings Ltd., ZhenFund and HongShan, have already received their payouts, according to people familiar with the matter, asking to remain anonymous to discuss private transactions. Benchmark, a US-based venture firm that led an investment in Manus last year, has even delivered payouts to its limited partners, a person with knowledge of the situation said.

One big question will be whether Xi Jinping’s government has the power to force the Manus deal’s reversal — and, if so, how. While Meta no longer maintains a significant presence in mainland China, it still derives a significant chunk of revenue via advertisers based in the world’s No. 2 economy. It got about 10% of its overall revenue from China-based advertisers in 2023, executives have said. China revenues totaled $18.35 billion in 2024, the company has said in its annual report.

https://www.msn.com/en-us/money/other/xi-tests-china-s-reach-by-blocking-meta-deal-that-s-already-done/ar-AA21QMlB