Asian corporations using M&A to pursue growth
By Kim Jae-won
Asian corporations are aggressively using mergers and acquisitions (M&A) to pursue growth with more sophisticated and long-term strategies, a global investment bank said Friday.
JPMorgan said Asian companies are optimistic and eager to grow through acquisitions in the region and globally.
“M&A volumes in the Asia-Pacific region have grown by 60 percent this year and are almost in line with those in Europe, the Middle East and Africa, a significant threshold,” said JPMorgan in a report quoting data from Dealogic, a financial information provider.
The investment bank said Asian companies are becoming more aggressive in approaching M&A deals, willing to pay premiums to strike them.
“Businesses from China to Thailand in a wide range of industries view themselves overwhelmingly as net buyers, and say they take a longer, more strategic view when determining the success of any transaction and are not afraid to pay a premium for success.”
Business leaders surveyed by JPMorgan viewed growth via acquisitions as key to their five-year strategies. They are relying on relationships with financial advisers to help drive good matchmaking, according to the report. As many Asian buyers are new to M&As, and have varying comfort levels with the process, they desire a higher level of engagement with a financial adviser.
JPMorgan said Asia’s M&A leaders want to see their counterparts in senior management involved and committed in building confidence for successful transactions. They said building relationships with an acquirer’s senior management was the most important criterion in determining whether to proceed with a deal.
“Active involvement in due diligence, availability for face-to-face meetings and engagement throughout the acquisition process are all important components of building that connection to Asian corporations,” the report said.
Fifty-five corporations in nine major Asian markets had interviews for the survey between July and October, JPMorgan said.
In Korea, private equity firms have led M&A deals this year. MBK Partners got the spotlight in September by signing to buy a 100 percent stake in Homeplus from U.K. retail giant Tesco for 7.2 trillion won, the largest buyout in the Asia-Pacific region and the largest M&A transaction in the country. Homeplus is Korea’s No. 2 player in hypermarkets and supermarkets.
Samsung Group, the nation’s largest business conglomerate, also takes an aggressive approach to M&As to restructure its business portfolio. The group sold its two affiliates ― Samsung Techwin and Samsung General Chemical ― to Hanwha Group in November last year for $1.7 billion as part of its strategy to focus on its electrics and bio businesses.