Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Tech, cross-border activities set to drive Asia M&A next year

TechnologyDec 31, 2020 07:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. People cross a street during morning rush hour in front of the skyline of the CBD in Beijing

By Kane Wu

HONG KONG (Reuters) - Coronavirus-spurred growth in the technology sector will help drive M&A activity in the Asia Pacific next year, bankers and lawyers predict, with the potential easing of Sino-U.S. tensions likely to revive Chinese outbound investment.

Deals involving Asia Pacific firms totalled $1.2 trillion in 2020, up 12% from 2019. Seven of the year's 10 largest transactions were announced in the third quarter, which in total accounted for 40% of the year's deals by value.

High technology and telecommunications companies surged to a 23% share of deal value, up from 14% last year, while retail and consumer products and services firms also reported growth.

"COVID has dramatically accelerated digitalization, e-commerce and fintech," said Jung Min, co-head of merger and acquisitions (M&A) at Goldman Sachs (NYSE:GS) in Asia, excluding Japan.

"Companies that have benefited are now suddenly much larger in size and financial scale, creating significantly more potential to make strategic investments," he said. "Industry disruption, change and transformation will continue and drive the larger transactions."

In the latest such move, Qatar's telecoms company Ooredoo and Hong Kong conglomerate CK Hutchison Holdings are exploring a deal to merge their units in Indonesia, the world's fourth most populous country.

Samson Lo, UBS' head of Asia M&A, said the outlook for China outbound deals was positive, despite persistent regulatory pushback from many countries. "There continues to be appetite for good quality assets in Europe," he said.

In a report published this month, law firm Allen & Overy flagged the potential return of Chinese healthcare sector investors to the U.S. market for the first time in many months on easing trade tensions.

Antagonism between Washington and Beijing over the past year under outgoing President Donald Trump has hampered deals. Investors say the incoming Biden administration may not mean an instant thaw in relations, but will likely provide a more predictable policy approach.

Dealmakers are also counting on a steady pipeline of cross-border deals involving Asian companies' strategic investments as well as divestments of multinational companies in the region.

"We expect cross-border activity to be a prominent feature, although it’s unlikely to be China outbound driven like in years past," said Richard Wong, Morgan Stanley (NYSE:MS)'s Asia Pacific head of M&A. "We expect it to feature Asian sellers of overseas assets ... or highly selective strategic acquisitions overseas."

China and Japan led Asia's M&A growth in 2020, against a 5.5% decline globally. China, the world's second largest economy, recovered strongly from the earliest coronavirus outbreak with a 28% increase in deals from 2019.

Japan contributed half of the region's mega deals worth $5 billion or more, including Nippon Telegraph and Telephone (OTC:NPPXF) Corp's $40 billion tender offer for NTT Docomo (OTC:DCMYY).

Private equity-backed deals in the region reached a record high of $129 billion, up 51% year-on-year.

Despite the deal bonanza, M&A fees dropped to a five-year low of $4.2 billion as fewer transactions were completed this year compared to 2019, Refinitiv data showed.

Dealmakers have also cautioned that China's latest anti-trust crackdown on its tech companies could be deterrents in future M&A.

Morgan Stanley topped the region's league table for announced M&A deals in 2020, followed by Goldman Sachs and CICC.

Tech, cross-border activities set to drive Asia M&A next year
 

Related Articles

World stocks at 1-month high as bond yields soften
World stocks at 1-month high as bond yields soften By Reuters - Oct 19, 2021 4

By Saikat Chatterjee LONDON (Reuters) - World stocks climbed to a one-month high on Tuesday as a rally in technology shares and prospects of solid corporate earnings helped...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email