China Telecom

Asia-Pacific M&As lose some puff

Region's deal value down in first nine months but gains in China and signs of broader pickup

PUBLISHED : Saturday, 22 September, 2012, 12:00am
UPDATED : Tuesday, 23 January, 2018, 11:43am


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Mergers and acquisitions involving companies in Asia-Pacific excluding Japan lost steam in the first nine months, with a 17.8 per cent drop in the value of announced deals, Thomson Reuters said.

The drop came despite a 3 per cent increase in deals targeting mainland China.

The announced deals in the Asia-Pacific region total US$381 billion so far this year, compared with a strong US$463.5 billion in the same period last year, according to a preliminary M&A review issued by the news and data provider yesterday.

Deal count so far this year is down 18.3 per cent from a year earlier to 7,076, the lowest deal volume since 2005, suggesting reduced risk appetite of global investors in the face of economic uncertainties.

China's monopoly giants topped the value of announced M&As in the first nine months. China Telecom said last month it agreed to acquire a wireless network from its parent company for 84.6 billion yuan (HK$103.52 billion).

Meanwhile, CNOOC, the Hong Kong-listed unit of China National Overseas Oil Corp, said in July it was making a takeover offer for Canada's Nexen for US$15.1 billion.

Despite China's economic slowdown, the value of the announced deals targeting Chinese companies rose 3 per cent to US$109.4 billion from a year earlier, capturing 37 per cent of the US$293.8 billion targeting Asia-Pacific companies.

Australia was the second preferred target, with a 16 per cent share, but the announced deal value targeting Australian companies slumped 53 per cent in the first nine months from a year ago. Hong Kong was ranked sixth, with the value down 15 per cent to US$13.8 billion.

However, Asian M&A has been accelerating, with US$136.6 billion in announced deal value so far in the third quarter compared with US$131.7 billion in the April-to-June period.

Fang Jian, a managing partner at global law firm Linklaters, said earlier this year that China would remain a hotbed for potential M&A activities for the rest of this year.

Opportunities are seen arising from initial public offerings of city commercial banks on the mainland because they would probably introduce foreign strategic investors while they were waiting to list, Fang said.