Top M&A Deals and Recap in Asia-Pacific First Half 2015

M&A in Asia-Pacific revealed a positive trend and strong first half this year.  Advancement in technology, low commodity prices and a more connected Asia are forcing companies to realign core business strengths.  At the same time, cash-rich companies are scouting for strategic investments to penetrate markets.

In the first half of 2015, the number of deals increased from 1539 to 1563, an increase of 24 deals. The eye opener is the value of the deals. The total value of deals reached was $408b, a 42% increase from the same period last year. In part, the value comes from the restructuring of large corporations.

In January, there was the Hutchison-Cheung Kong merger, a deal valued at $40 billion. Then the $34.8b Cheung Kong Property spin-off, that ended up listing on the Hong Kong Stock Exchange (SEHK) in June.  If you add up those two deals alone, it makes up 18% of the total deal value in the first half of the year.

South Korea came next with a $26b merger of SK Holding and SK C&C followed by the $11b Samsung C&T and Cheil Industries merger. Both added a combined deal value of $37b. South Korea ranked second on the M&A list in Asia-Pacific.  The restructuring deals made an all-time record high of $148b for the first six months.

CK-Hutchinson expansion

The positive trend is partially attributed to outbound deals. The CK-Hutchinson expansion to North America and Europe added $20b to make a new first half high of $62b, an increase of 45.7% from the same period last year. Stakes in Telefonica UK, Husky Energy and Eversholt Rail contributed to the outbound value. While inbound values totaled $45.6b dropping slightly by 5.1%.

Eversholt Rail, a JV with CK-Infrastructure Holdings (CK-Hutchinson owns 75% of CKI),  recently purchased 137 trains to beef up their online travel business, Hutchgo.com. Hutchgo formerly Hutchinson-Priceline rebranded itself after CK Hutchison fully acquired the JV from Priceline.

In Europe, CK-Hutchison is getting closer to a deal to combine its wireless businesses in Italy with VimpelCom. This would make it the largest mobile-phone firm in Italy. The second half will be a busy year for the billionaire owner of CK-Hutchison, Li Ka-shing.

China’s deal value leaped 63.8% to a whopping $98.3b, making up 82% of the total growth in Asia-Pacific. In the technology sector, industrial and consumer companies acquired technology businesses in China.  Deal value totaling $27.5b, a 68% increase from last year.  The boost was expected to continue but after the IPO freeze placed by the Chinese government, it may prevent listed Chinese tech companies on the NASDAQ to delist and then relist in China.

The Mining, Energy & Utilities sector increased by 78.6% to US$69.9b, and made up 17.1% share by value. Real Estate sector made up $57.3b and the Consumer sector $60.4b.

Recap

• Total M&A deal value in Asia-Pacific was $408b with 1,563 deals.
• Top sector was Mining, Energy & Utilities with 134 deals worth $69.9b.
• Top financial adviser by deal value was Goldman Sachs with 28 deals worth $102.7b.
• Top financial adviser by deal count was PwC with 50 deals worth $33b.
• Top legal adviser was Freshfields Bruckhaus Deringer with 19 deals worth $120b.

The M&A outlook remains positive for the second half.  Businesses are looking for go-to-market synergies. Deal flow looks like it will continue as more companies consolidate and restructure.