While the world’s fastest growing markets have reduced their overseas spending on mergers and acquisition (M&A) in 2012 by 6%, falling to a three-year low, this has had little impact on China’s appetite for M&A overseas which has continued to remain strong, according to findings from international law firm Freshfields Bruckhaus Deringer.
Out of a total investment spend of US$91 billion, outbound M&A from China was valued at US$32 billion across 235 transactions in 2012, representing 36% of all investments from high growth economies in that year. China is now on a four year streak as the most acquisitive high growth nation, significantly ahead of the second placed nation.
According to Freshfields' analysis, high growth M&A spending surged dramatically on US and UK targets in 2012, with investment in the US up 261% from $4.9 billion to $17.5 billion, making it the top location for emerging market buyers in 2012. Investment in the UK grew 60% year on year, attracting $8.6 billion in 2012, up from $5.3 billion the previous year.
Meanwhile, China also proves to be very attractive destination for M&A in the eyes of the fastest growing economies, ranking second, behind Brazil, as the most popular place for investment in 2012 recording $9.6 billion of inbound M&A deals.
"China proves yet again to be the high-flyer for M&A amongst emerging market economies," say Freshfields Asia managing partner Robert Ashworth. "In addition to continuing strong levels of outbound activity what is interesting is China’s diversification away from the commodities sector and a growing focus on consumer brands and technology, where we are seeing considerable activity. The US as well as Europe, and the UK in particular, have been fertile ground for Chinese buyers in the past 12 months."
In sector terms, oil and gas continued to be the most attractive field overall for buyers and has been so for the last two years.
Companies from high growth markets were involved in M&A deals totalling $18.9 billion in the sector last year.
Other popular sectors include insurance and food and beverage, with total volume for insurance deals surging to $9.5 billion in 6 deals and food and beverage recording $8.1bn in 44 deals.