As the year approaches to a close, overall announced M&A activity involving Asia-Pacific (excluding Japan) slowed down as deal value totaled US$529.4 billion, down 9.4% from 2011, and the lowest annual period since 2009 when volume dipped to $373.2 billion.
Figures from Thomson Reuters show that deal count dropped 13.9% to 9,810 and posted the slowest M&A activity since 2005 (9,216 announced deals). Fourth quarter volume this year reached $129 billion, down 18% sequentially from third quarter of 2012, but increased 6.5% from the fourth quarter of last year.
Asia-Pacific’s completed M&A activity stood at $351 billion thus far, down 34.4% after a strong period in 2011 ($534.8 billion) as the number of completed deals fell 17.8% to 5,740 – the slowest deal volume since 2003 (5,168 deals).
Among the sub-regions of Asia-Pacific, Southeast Asia-target M&A activity saw the biggest growth with 36.6% increase to US$97 billion compared to last year. Australasia witnessed the largest decline in deal value falling 48.3%, while North Asia and South Asia slightly grew 0.9% and 3.9%, respectively, from 2011.
China Remains Most Targeted Nation
Target Asia-Pacific M&A fell 7.4% to $412.7 billion so far in 2012 compared to the previous year, marking the lowest annual period since 2009 ($319.8 billion) and accounted for 17.5% of target M&A globally. China continued to be the preferred target in the region by both domestic and foreign acquirors capturing 36.2% of the market share with $149.3 billion, up 5.5% from 2011.
Notably, Singapore saw a significant uptick this year with a 176.5% increase in deal value from 2011. Driven by mega rival bids for Fraser & Neave which are currently still pending and will spill over in 2013, target Singapore M&A reached a record volume of $47.2 billion, and captured 11.4% of Asia’s target M&A.
United States was the most active non-Asian acquiror of Asian companies and had the most number of announced deals with 415 transactions worth $21 billion, down 20.8% from 2011.
Energy & Power Captures 17% of Asia’s M&A Activity
The Energy & Power sector took the bulk of acquisitions involving Asia Pacific companies with 16.6% market share, despite a 20.0% decline in deal value to $88.1 billion from 2011. Oil & Gas sub-sector amounted to $62.8 billion, down 14.6% from last year. Materials M&A activity captured 14.0% of the market share, but fell 33.5% to $74 billion as acquisitions in the Metals & Mining sub-sector dropped 34.4% to $55.5 billion over 2011.
The Financials and Consumer Staples saw double-digit percentage growth this year and accounted for a combined market share of 23.2%, a marked increase from the 15.9% of overall activity for these sectors last year.
Private Equity-backed M&A Declines 17% from 2011
Buyside Financial Sponsor M&A activity in Asia-Pacific totaled $27.2 billion so far this year, down 17.1% from 2011. Fourth quarter activity reached $3.5 billion, a 70.0% sequential decrease over 3Q 2012 and a 39.7% decline from the 4Q 2011, making it the lowest quarterly period since the first quarter of 2012 ($3.3 billion).
Majority of the PE-backed M&A in the region targeted the Financials sector with $5.2 billion, up 25.6% compared to 2011, and pushing market share to 19.0% this year from 12.6% in 2011. Media & Entertainment and Healthcare saw significant increase in deal value with 93.8% and 137.9% growth from 2011, respectively. Private equity-backed M&A targeting China accounted for 39.1% as deal value reached $10.7 billion this year, up 56.0% over 2011.