Asia Pacific Suffers Slowest Quarter Since 2009

Asia Pacific (ex. Japan) M&A Financial Advisory Review: Asia Pacific Suffers Slowest Quarter since 2009

The value of announced M&A deals involving Asia Pacific companies, excluding Japan, totaled US$92.4 billion so far this year, dropping 38.4% after a strong start in 2011 (US$150.0 billion).

With the absence of mega-deals such as the BRE Retail Holdings-Centro Properties Group (US$9.4 billion) and Reliance-BP deal (US$90 billion) in early 2011, this year witnessed the lowest level for quarterly deal activity since the second quarter of 2009 (US$82.7 billion) and the slowest start to a year since first quarter of 2009 (US$56.7 billion).

The adverse deal-making environment was emphasized by a 35.8% drop in number of announced deals with only 1,851 transactions to date compared to the same period in 2011, thus making it the lowest quarter, by deal count, since second quarter of 2003. At least 1,079 deals were completed so far this year involving Asia-Pacific companies worth US$72.4 billion, down 37.3% in value and the deal count reduced by 39.0% from 1Q 2011.

China Remains Most Targeted Nation

M&A targeting Asia-Pacific companies had its third consecutive quarterly decline this quarter down 40.1% from the first quarter of 2011 to US$69.4 billion. Chinese companies continued to be the preferred target by both domestic and foreign acquirors with US$26.0 billion, down 25.2% from first quarter of 2011, but captured 39% of Asia Pacific-target M&A activity. Target announced M&A deals slowed down across Asia-Pacific nations, but Malaysia and Vietnam saw significant uptick in dollar value from 1Q 2011, up 305.5 and 270.4%, respectively.

United Kingdom accounted for 18.8% of the region’s inbound acquisitions in dollar value (US$4.5 billion) while United States saw the highest number of announced deals targeting Asia Pacific companies with 77 deals.

Materials Sector Captured 24.9% of Deal-Making Activity

The Materials sector made up the largest portion of acquisitions involving Asia-Pacific companies, capturing 24.9% of the M&A activity. Metals & Mining increased 16.5% from the first quarter of 2011 with 236 deals worth US$20.7 billion, which brings the value of announced M&A deals in the Materials industry to US$23.0 billion.

Meanwhile, the deal-making activity in the Energy & Power sector declined by 52.6% driven by the considerable drop in the volume and value of acquisitions in the Oil & Gas sector. M&A activity in the Oil & Gas sector is at its lowest level since third quarter of 2009 as it dropped considerably by 71.0% in value to US$7.8 billion from the first quarter of 2011. By deal count, the sector announced 52 deals in the first quarter of 2012, the slowest quarter since the second quarter of 2003 when also 56 deals were announced.

Private Equity-backed M&A Down 58.0% from 1Q 2011

Private-equity backed M&A activity in Asia-Pacific witnessed its fifth consecutive quarterly decline this quarter, shrinking by 30.4% from fourth quarter in 2011 to US$4.1 billion and down 58.0% compared to the first quarter of 2011. The bulk of activity was in Consumer Products & Services sector increasing six-times to US$1.9 billion from the same period last year and thus accounted for 45.4% of the region’s PE-backed M&A. Australia (US$1.6 billion), China (US$1.0 billion) and India (US$884.8 million) accounted for a combined market share of 84.5%.

• Click here for the Asia-Pacific (ex. Japan) M&A Financial Advisory Review
• Click here for Excel tables: Thomson Reuters - Any Asia-Pacific Involvement Completed M&A Advisor Ranking (AF79)

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