Mergers & Acquisitions

Asia-Pacific outbound deals fall 58pc in first half on China curbs

European M&A surged ahead, while US and Asia-Pacific softened

PUBLISHED : Monday, 10 July, 2017, 9:59pm
UPDATED : Monday, 10 July, 2017, 11:09pm

Outbound merger and acquisitions (M&As) led by companies in the Asia-Pacific region tumbled by 58.1 per cent in deal value in the first six months, hurt by tightened capital controls imposed by China’s regulators, according to a report issued by Mergermarket on Monday.

“Tightened outbound M&A control imposed by Chinese regulators have dampened the deal flow from China, with a significant impact on large ticket deals,” the report said.

China alone saw 27 fewer deals into Europe in the first half of 2017, with deal value dropping by 65.7 per cent to US$ 25.6 billion across 59 deals. This contrasted with the same period last year, which set a record in deal value totalling US$ 74.8 billion across 86 deals, including the US$ 45.9 billion ChemChina-Syngenta deal, according to the report.

In the first half of this year, Asia-Pacific’s outbound deal value decreased by 58.1 per cent to US$ 55.7 billion across 268 deals, Mergermarket said.

Chinese outbound M&A activity set to cool this year after record 2016

Globally, the M&A deal value has increase by 8.4 per cent in the first two quarters, despite 1,117 fewer deals compared with the same period last year. The first six months recorded US$ 1.49 trillion across 8,052 deals.

“Companies have been looking at ‘future-proofing’ in the wake of rapid changes to technology and politics to keep ahead of rivals,” the report said.

It said there had been 17 mega deals valuing more than US$ 10 billion announced since the beginning of the year, versus 14 in the first half of 2016.

As faith in the market continues to grow, European M&A has surged ahead, securing a 32.3 per cent share of the global value.

The US with 2,446 deals valuing US$ 602.6 billion and Asia Pacific – excluding Japan – with 1,585 deals worth US$ 272.9 billion, saw their shares of the global value drop to 40.4 per cent and 18.3 per cent respectively, from 42.8 per cent and 21.3 per cent, the report said.

Beijing’s curbs on M&A deals will prevent ‘wrong deals’ but that’s good for the long term, says EY

With Chinese regulators slamming the brakes on the overseas shopping spree, China has seen a shift back towards domestic activity with deals between Chinese bidders and targets comprising eight of the top 20 deals in the region, the report said.

The largest deal in the first half year was the acquisition by a consortium of 11 investors for a 14.74 per cent stake in Hengda Real Estate Group for US$ 5.8 billion, a vehicle used by property giant China Evergrande Group to realise a back-door listing on the A-share market.

It was the fourth biggest deal in Asia-Pacific so far this year, the report said.