Asia-Pacific M&A Down 42.7%

Preliminary first quarter figures compiled by Thomson Reuters show that M&A activity in the Asia-Pacific region has dropped 42.7% since this time last year.

The data, which includes Japanese M&A volumes, highlights that deal levels since the start of January have amounted to US$75.4bn, generated from 2,006 deals, compared to last year’s total of US$131.6bn.

Globally, announced bid activity has reached US$359.1bn with the Americas being the most targeted region to date with US$179.1bn of deals.

It is Australian firms that have been the most targeted in the Asia-Pacific region, having so far seen 255 deals worth US$20.9bn. Further testimony to this was the announcement today that Japan’s largest brewer, Asahi has agreed to acquire Schweppes Australia from Cadbury’s for US$769.5m. Although the deal between Asahi and Cadbury for Schweppes Australia was announced back in December, Coca-Cola Co had an option to negotiate for the business which expired this month.

It has been Chinese acquirers, in their quest to secure natural resource and mining assets that have accounted for a large majority of the Australian activity.

This push by the Chinese into the materials sector has made that particular industry the most sought after in the region. The materials sector accounted for 37.5% or US$28.3bn of the overall Asia-Pacific deal activity. The financials industry was the second most active in the region, although its US$10.6bn deal value was 61.4% down on the same period in 2008.

According to the figures, activity by private equity players amounted to US$946.1m, an 85.1% drop on last year. Looking at the figures for withdrawn deals, the volume in the Asia-Pacific region hit US$13.8bn, down 24.6% on the equivalent total for 2008.

Behind Australia, it was firms in Japan and China that were respectively the second and third most targeted in the region.

The volume of deals involving Chinese businesses was down 1.9% on last year to US$32.6bn, with the emphasis being on acquisitions in the materials sector which accounted for US$23.4bn of activity or 71.7% of the Chinese market.

The level of cross border deals into China currently stands at US$2.8bn, a drop of 19.9% on last year. The largest proportion of the deals were targeted on the Chinese energy and power sector, which generated deals worth US$797.2m or 28.2% of the market.

China released February trade figures yesterday which showed a dramatic decline in export levels, down 25.7% on last year, which was a long way from the 5% that had been forecast. The 24.1% drop in imports was in line with the 25% predictions. The result was a trade surplus of US$4.84bn, a three year low which was significantly below expectations of US$27.3bn. January’s trade surplus had been US$39.1bn.

Source: Thomson Merger News