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M&As continue upwards

Released at: 15:26, 08/01/2019

M&As continue upwards


Mergermarket report shows M&As growing in Vietnam and Asia-Pacific.

by Doanh Doanh

M&As in Vietnam during 2018 totaled $3.3 billion in 49 deals, according to the latest report from Mergermarket, the leading M&A data and intelligence provider. Deals in the first three quarters totaled 38 worth $2.754 billion.)

M&A deals in Asia-Pacific (excluding Japan) also experienced a robust 2018, reaching the second-highest annual value Mergermarket has recorded and highlighting an increasingly deal making-friendly region, with 4,036 deals and a combined $717.4 billion, up 2.6 per cent in value but down by 42 deals compared to 2017 ($699.6 billion in 4,078 deals).

Despite the volume decrease, an uptick in big-ticket deals ensured the overall M&A value varied only slightly. Five megadeals (>$10 billion) were announced in 2018 - one more than in 2017 - but just one such deal was recorded in the second half of the year. The largest deal to target the region was the $16 billion acquisition of Indian online retailer Flipkart by retail giant Walmart.

Industrials & Chemicals became the most attractive sector in the region in 2018 by both value and volume, posting $115.2 billion across 832 deals, an increase of 23.5 per cent in value compared to 2017 ($93.3 billion and 825 deals). This was largely due to one blockbuster tie-up involving Chinese chemical product manufacturers Yantai Wanhua and Wanhua Chemical worth $12.7 billion.

Thanks to a strong fourth quarter as well as large financing in pre-IPO companies, the sector reached an annual value of $41.3 billion, a 63.8 per cent increase compared to 2017. However, the absence of strategic planning and rising competition globally may lead to a cooling down in biotech activity, according to Mergermarket’s intelligence.

Regarding cross-border activity, outbound M&A was buoyant while inbound M&A experienced mild growth. The value of outbound transactions reached $160 billion in 2018, hitting the second highest level Mergermarket has recorded and posting a 52.4 per cent increase compared to 2017. Despite increased scrutiny by overseas regulatory regimes, China remained the most active investor outside the region following an acceleration of M&A approvals by Chinese authorities together with more attention being paid on target selection and deal structures.

Private equity firms remained active, despite buyout activity experiencing a dip, with 514 deals worth $124.1 billion announced in 2018; a 3.4 per cent decrease by value compared to 2017. This was largely due to a weak fourth quarter, when value and deal count both shrunk. In spite of this, the annual value still hit its second highest point on Mergermarket record, behind only 2017. The $14 billion acquisition of Chinese payment company Ant Financial by a consortium led by GIC was the largest buyout deal in 2018. “M&A experienced a robust 2018, reaching its third highest annual value on Mergermarket record,” said Ms. Lucy Shen, Research Analyst at Mergermarket.

According to the recent Global Transactions Forecast Report from Baker McKenzie, M&As in Vietnam are forecast to reach $4.1 billion in 2019. With the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) coming into force and the EU-Vietnam Free Trade Agreement (EVFTA) expected to be ratified next year, Baker McKenzie’s experts anticipate increased interest and confidence from investors looking to invest in Vietnam, which will likely help boost investment and M&As in 2019.

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