By Kane Wu and Yantoultra Ngui
Investors and businesses in the Asia-Pacific region are witnessing a resurgence in cross-border mergers and acquisitions this year, particularly in Japan. As companies adjust to cope with higher interest rates, they are seeking new avenues for growth through strategic deals.
The total announced value of cross-border M&A deals in the Asia-Pacific region rose by an impressive 25% year-on-year to reach $286 billion as of Sept. 30, according to LSEG data. What's noteworthy is that around 80% of these deals were transacted with entities outside the region.
Andre Gan, a seasoned M&A partner at Wong & Partners in Kuala Lumpur, pointed out that the recent uptick in cross-border transactions can be attributed to political stability returning to some markets, coupled with pent-up demand for investments and dealmaking. Additionally, adjustments to higher interest rates have played a significant role in driving M&A activity in the region.
Overall M&A activity in Asia totaled $622 billion in the first nine months of the year, showing a marginal decline of 0.2% compared to the same period in 2023, as per LSEG data.
The cross-border M&A surge was fueled by several mega-deals, including Alimentation Couche-Tard's $38.5 billion takeover bid for Seven & i Holdings and REA Group's aggressive pursuit of Rightmove.
Bankers predict that Japan will be at the forefront of the region's multibillion-dollar deals, thanks to relaxed corporate governance rules that have made its public companies more open to takeovers. Local champions in Japan are also looking to expand overseas, further driving M&A activity.
With Japan inbound M&A skyrocketing to a record $74 billion and outbound deals increasing by 49% to $50 billion, Japan is poised to be a key player in the regional M&A landscape.
Looking ahead, Deutsche Bank's Rohit Satsangi anticipates a resurgence of outbound activity by state-owned Chinese companies, particularly in renewable and natural resources assets globally.
While China outbound deals saw a slight decline this year, experts remain optimistic about the overall outlook for M&A in the Asia-Pacific region. With the recent easing of interest rates by the U.S. Fed and the conclusion of the U.S. elections, stability is expected to drive a resurgence of M&A activity in the coming years.
As the financial landscape continues to evolve, investors and businesses should stay informed about the latest trends in cross-border M&A to make informed decisions and capitalize on emerging opportunities in the market.
