KUALA LUMPUR, Sept 13 — Asia-Pacific mergers and acquisitions (M&A) activity hit an all-time high in the first six months of 2021, with values targeting the region nearly doubling to US$535 billion (US$1=RM4.14) from US$284 billion in the same period last year, said global accounting and consulting group EY.
According to new analysis by EY, more than 50 deals over US$1 billion were announced targeting Asia-Pacific so far this year, up by almost five times year-on-year (y-o-y).
“Despite many parts of the global economy still operating under restrictions, cross-border transactions have also staged an impressive comeback, increasing by almost three times y-o-y to US$159 billion,” it said in a statement today.
EY said the technology sector continued to lead deal activity in the region, accounting for almost one-third or about 28 per cent of the cumulative deal value in the first half of 2021.
“M&A targeting technology companies hit a record high in the region, with deal value increasing by 88 per cent y-o-y.
“The advanced manufacturing and mobility sectors were the subsequent most active in terms of deal activity,” it said.
EY Asia-Pacific strategy and transactions leader Yew-Poh Mak commented that the pandemic had propelled innovation and significant business transformation across all industries.
“In the tech sphere, M&A activity in Asia-Pacific has been fueled by the emergence of next-gen technological applications, such as industrial Internet of things, artificial intelligence, electric vehicles and sustainable, fuel-efficient technologies.
“For advanced manufacturers who pursued M&A, the primary activity has been bolt-on acquisitions in the same sector designed to increase market share or transformative deals that would enable a more sustainable business model,” he noted.
According to Mak, consolidation is a means for businesses to combine and complement their strengths to differentiate themselves and, in the technology sector, to focus more on a target’s business resilience, digital technology alignment, and to gain market share.
EY also noted that outbound value in Asia-Pacific rebounded to pre-Covid-19 levels — US$85 billion — while the inbound value reached a historical high at US$74 billion, jumping by more than 170 per cent compared to the pre-Covid-19 pandemic average.
Meanwhile, Preman Menon, Malaysia strategy and transactions leader at Ernst & Young PLT, said the firm also expected to see M&A trends in Malaysia mirroring the trends seen globally, albeit lagging behind the recent pace seen in the larger markets.
“The Covid-19 pandemic has accelerated the need for Malaysian businesses to review and realign their strategy and formulate their transformation journeys for the future.
“While plans and growth trajectory vary by sector, we observe common themes centering around transformation, agility and sustainable growth. In line with this, we believe that M&A activity will feature as companies look to acquire technology and skillsets, favoring ‘buy’ versus ‘build’, ” he said.
Looking forward, EY said, the appetite for deals in Asia-Pacific was now at its highest level since 2010, with almost 90 per cent of companies in the region indicating that they were on the lookout for cross-border acquisitions in the next 12 months.
Mak said digitalisation remained paramount in Asia-Pacific and globally, and any acquisition of emerging technology and innovative solutions would enable companies to scale up their existing technological capabilities, accelerate the digitalisation of the customer journey and transform business processes.
“Identifying potential areas of growth to make acquisitions and making the difficult decision to divest underperforming assets are both firmly on the corporate agenda in the Asia-Pacific and worldwide,” he added.
— Bernama
