Despite depressed global M&A volumes, deal value in North East Asia increased during the last quarter by 30% compared to the same period last year, with deal values returning to levels last seen in 2007 and 2008, according to the findings of the latest Allen & Overy M&A Index.
The study also shows that China and Hong Kong are amongst the world’s top ten leading outbound acquirers.
Inbound investment into Greater China by multinational companies remains buoyant, the continuing trend of companies allocating funds for growth in Greater China is clear, with many doing so in the belief that the region holds better prospects for growth.
As multinationals deepen their investment into the region, seeking to grow by expansion, there has been upwards of US$95 billion worth of M&A activity in Greater China during the first three quarters of 2011 and transactions are beginning to increase in size, average deal value in Q3 2010 was US$546 million, while in Q3 2011 it had increased to US$634 million.
Outbound M&A, however, continues to gather pace in Asia, fuelled partly by the region’s, in particular China’s, ongoing need for energy and natural resources. China is the world’s fourth most active participant in energy and resources M&A in the year so far, contributing 20 deals overall, 14 of which were international, with a combined value of almost US$10 billion.
The largest recipient of outbound Chinese M&A cash was Australia where deal values amounted to US$2.9 billion. Other sectors where Chinese companies made a strong impression over the year to date were technology, media and telecommunications (TMT) accounting for 4.3% of deal volume and life sciences with 4.2% of deal volume.
"Making acquisitions in Asia often involves obstacles, both visible and invisible, but it still remains a key target and as such much of Asia are net sellers," says Gary McLean, Allen & Overy's head of Corporate in Asia Pacific.
In comparison, western countries like the US, UK and France, even with the depressed state of many of their markets, remain net buyers. Much of this can be attributed to those western countries' determination to get a foot hold in the growth markets of Asia.
China, Russia and India feature in the list of top 20 global outbound acquiring countries, with 33, 12 and ten international acquisitions respectively. However, in a sign that they are yet to make a true impact as M&A acquirers, each is found to be a cross-border ‘net seller’ – China -14, India -15 and Russia -2 deals respectively.
The US remains the world's largest outbound acquirer with a cross-border ‘net score’ of +52 deals year-to-date. The top markets for US buyers include the UK (39 acquisitions), Canada (18), Germany (15), France (12) and Australia (nine). India, China and Brazil also feature in the top ten for US buyers.
Japan and China's outbound M&A growth is among the strongest of all countries. In 2007 China ranked as 18th most active cross-border outbound acquirer, now ranked sixth. Japan has risen from 13th to third.
The US (20 acquisitions), UK (19), Canada (14) and China (14) are the largest acquirers of foreign energy & resource assets. The US also leads outbound life science acquisitions, with 19 cross-border purchases, ahead of Japan (eight) and Canada (four).
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