Japan outpaces China in race for outbound mergers as trade war, capital controls weigh on deal flow
- China was fourth worldwide with US$105.4 billion in deals, according to data provider Dealogic
- Chinese companies among most active deal makers in Asia outside Japan, according to Mergermarket
Driven by a massive tie-up between Takeda Pharmaceutical and the Irish drug maker Shire in May, outbound mergers and acquisitions from Japan outpaced China for the first time in five years in 2018, according to financial services data provider Dealogic.
Japanese companies accounted for 649 deals worth US$184.2 billion last year, making Japan the second-largest market for outbound M&A globally, according to Dealogic. That compared with 685 deals worth a combined US$79.5 billion in 2017.
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China was fourth worldwide with US$105.4 billion in deals, boosted by China Three Gorges’ US$27.5 billion acquisition of utility EDP-Energias de Portugal — the second-largest Chinese outbound deal on record, according to Dealogic.
It was the second consecutive annual decline since China reported a record US$217.6 billion in outbound deals in 2016. Chinese-led outbound deals were worth US$136.7 billion in 2017.
Japan clinched the top spot in Asia as a trade war escalated between the United States and China last year, threatening to destabilise global supply chains and leading to greater scepticism over Chinese-led deals.
Overall, global M&A volume reached its highest level since 2015, with US$3.35 trillion in deals, according to Dealogic.
“Boutique M&A financial advisers increased the pressure on global investment banks after increasing their share of global M&A volume to 40.9 per cent, equating to US$1.37 trillion in total volume, the highest percentage share on record so far,” said Dealogic. “However, it’s not just volumes where the boutiques are continuing to squeeze. Boutiques also accounted for US$11.2 billion of revenue with investment banks accounting for US$16.3 billion, keeping on par with the previous record year of 2016.”