Late Surge in Asia M&As Lifts Global Total To 5-Year High In 4Q 2012
An unprecedented number of M&A deals in the final two weeks of 2012 contributed to the highest quarterly volume of completed deals globally (268) and the second highest number of deals completed (798) on an annual basis, since Towers Watson's Quarterly Deal Performance Monitor ("QDPM") began in January 2008.
(Media-Newswire.com) - SINGAPORE, Wednesday 16 January, 2013 – An unprecedented number of M&A deals in the final two weeks of 2012 contributed to the highest quarterly volume of completed deals globally ( 268 ) and the second highest number of deals completed ( 798 ) on an annual basis, since Towers Watson’s Quarterly Deal Performance Monitor ( “QDPM” ) began in January 2008.
Asian companies completed 22 deals in the last two weeks of the year to achieve a quarterly total of 68 and the region’s widest ever margin ( 37 ) over Europe, according to the Towers Watson research which was carried out in conjunction with Cass Business School. In terms of performance, Asia Pacific companies that completed M&A deals outperformed their MSCI index by 3.0 percentage points over the year.
“Asia-Pacific has been the most consistent region this year in terms of performance. We are used to seeing a surge in activity at year end, as companies try to push through deals before the New Year, but the scale of completed deals in the last two weeks of 2012 was bigger than anything we’ve seen before,” said Andrew Heard, Managing Director — Asia Pacific Benefits, Towers Watson. “It will be interesting to see how these deal volumes develop in 2013 and whether Asia can confirm its position as the second largest M&A market, building on its growing M&A experience and best-practice expertise.”
Towers Watson’s top five predictions for the M&A market in 2013:
The Asian market continues to fly. Led by Chinese and Japanese firms, Asia-Pacific acquirers will continue to grow in confidence, branching out to do deals further afield as the region continues to assert its recently acquired dominance over Europe in terms of M&A transactions. Chinese firms to enter the European mega-deal market. The conditions could be right this year for Chinese firms to enter the European M&A market in a big way. Expect some big-name companies to be targeted by cash-rich Chinese organisations. European deal volumes to remain subdued. 2012 was bad for European acquirers and 2013 volumes are unlikely to show much improvement. Whilst we remain optimistic that confidence may start to slowly return in the second half of the year, we would not expect this to be strong or fast enough to see a significant uptick in completed deals. Late 2012 surge proves to be a blip. Despite the large number of transactions completing in the final few weeks of the year, this is more likely to be a rush to the finish line for existing deals rather than signalling an upward trend. Volumes in Q1 2013 are therefore likely to suffer as a result. North American stability to continue. Stability will be the watchword for M&A in North America during the first half of 2013, after which we may find a surge in activity as the economic conditions continue to improve and confidence grows. Josephine Chow, M&A Consulting Business Leader, Mainland China and Taiwan, at Towers Watson, said: “We feel that this is the year in which Chinese companies enter the European takeover market in a big way. Current economic conditions in Europe will continue to restrain confidence, so buyers with healthy balance sheets are going to find a market populated with willing sellers but relatively few competing bidders. We have seen the continued growth of the Asian M&A market recently but while Japanese corporations have been notable in their cross-border activity the Chinese have tended to be much more domestically focused.
“Our expectation is that this could be the year when this changes and Chinese buyers will spread their wings and take advantage of the opportunities Europe presents. This means we could see some big name European brands being snapped up by Chinese giants and I wouldn’t be surprised if these form several of the top 25 biggest deals of the year for the first time in 2013. Acquirers should remember though that while there is still value to be had in Europe, thorough HR due diligence and carefully planned integration is required for success, and that cross-border deals in particular can raise significant challenges.”
* Completed M&A deals with a value of at least $100 million.
All analysis conducted from the perspective of the acquirer Share price performance within quarterly study measured as percentage change in share price from six months prior to the announcement date to the end of the quarter. All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered. Deal data sourced from Thomson One Banker About Human Capital M&A
Towers Watson’s Human Capital M&A Practice advises clients around the human capital aspects in a deal situation. This ranges from key elements of a financial due diligence through to the integration of the workforce post completion.
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