Cross-border mergers and acquisitions (M&A) in the Asia-Pacific region have seen a significant revival this year, particularly in Japan, as companies adjust to higher interest rates and seek new growth opportunities. With political stability returning to key markets, businesses are capitalizing on pent-up demand for investments, driving a notable uptick in cross-border transactions. According to data from LSEG, the total announced value of such deals rose 25% year-on-year to $286 billion as of September 30, with approximately 80% of these deals involving entities outside the region.
This resurgence in M&A activity is a clear sign that businesses are adapting to the new economic environment, where rising interest rates and inflation have reshaped corporate strategies. As Andre Gan, an M&A partner at Wong & Partners, a member law firm of Baker McKenzie in Kuala Lumpur, noted, "There has been a notable pick-up in cross-border transactions as political stability returned to some markets just as pent-up demand for investments and dealmaking and adjustments to higher interest rates began to drive M&A activity again."
Japan Takes Center Stage in Cross-Border M&A
Japan has emerged as a key player in the region’s M&A boom. The country’s inbound M&A activity surged more than 16-fold this year to a record $74 billion, while outbound deals increased by 49% to $50 billion, according to LSEG data. This sharp rise in M&A activity has been fueled by changes in corporate governance regulations, which have made Japanese public companies more open to takeovers. At the same time, some of Japan's top corporations are seeking to expand their global footprint, driving outbound investment.
Bankers expect Japan to continue playing a central role in the region’s multibillion-dollar deals, particularly as relaxed corporate governance rules have paved the way for more significant acquisitions. The country’s evolving corporate landscape has caught the attention of international investors, as evidenced by Canadian firm Alimentation Couche-Tard’s $38.5 billion all-cash takeover bid for Seven & i Holdings, Japan's largest convenience store chain. This deal represents the largest announced M&A transaction globally in 2024 and highlights Japan's growing appeal as a target for international acquisitions.
M&A Across the Region: A Mixed Recovery
While Japan leads the way, the broader Asia-Pacific region has experienced mixed results in M&A activity. Overall, Asia’s M&A value totaled $622 billion in the first nine months of the year, a slight 0.2% decline from the same period in 2023. However, the cross-border segment has shown significant resilience, buoyed by a series of high-profile deals.
Southeast Asia has also seen a pick-up in cross-border M&A, with German insurer Allianz announcing plans in July to acquire a majority stake in Singapore’s Income Insurance for approximately $1.6 billion. This deal is part of Allianz's broader strategy to strengthen its foothold in Asia’s growing insurance market. In addition, Texas-headquartered real estate investor Hines has been actively acquiring assets in the region, particularly in Japan and Singapore, with plans to explore further opportunities in Australia.
Despite these successes, the M&A outlook remains uncertain in some parts of the region. China, in particular, has experienced a significant downturn in outbound deals. So far this year, China’s outbound M&A activity has totaled $14 billion, down 8% year-on-year, marking the second-lowest level in a decade. The slowdown has been attributed to a range of factors, including weak demand for Chinese goods abroad and regulatory challenges at home.
However, experts are optimistic about a potential rebound in China’s M&A activity. Rohit Satsangi, Deutsche Bank's co-head of M&A for the Asia-Pacific region, anticipates a resurgence in outbound deals by Chinese state-owned companies, particularly those seeking renewable energy and natural resource assets globally. “Looking forward, 50% of the APAC pipeline is made up of global cross-border transactions,” Satsangi said, highlighting the region's ongoing integration into global markets.
Outlook for M&A in Asia-Pacific
The outlook for M&A in the Asia-Pacific region is expected to improve in the coming years, particularly as interest rates stabilize and political uncertainties ease. The recent easing of interest rates by the U.S. Federal Reserve and the conclusion of the U.S. elections in late 2024 are likely to provide a more stable environment for dealmaking.
Andre Gan of Wong & Partners anticipates a resurgence in M&A activity heading into 2025 and 2026. “Heading into 2025 and 2026, considering the recent easing of interest rates by the U.S. Fed and conclusion of the U.S. elections in late 2024, we expect continuing stability to lead to a resurgence of M&A activity,” he said.
This resurgence is likely to be driven by a combination of factors, including the need for businesses to diversify their operations and adapt to a rapidly changing global economy. As companies across the Asia-Pacific region adjust to higher interest rates and rising geopolitical tensions, cross-border M&A is expected to remain a critical tool for growth and expansion.
The Asia-Pacific region’s cross-border M&A activity is on a path to recovery, with Japan leading the charge thanks to favorable corporate governance reforms and increased openness to foreign acquisitions. While challenges remain, particularly in China, the broader outlook for the region’s M&A market appears positive. As businesses continue to navigate the complexities of the current economic environment, cross-border deals are set to play a crucial role in driving growth and fostering greater international cooperation.
(Source:www.moneycontrol.com)
This resurgence in M&A activity is a clear sign that businesses are adapting to the new economic environment, where rising interest rates and inflation have reshaped corporate strategies. As Andre Gan, an M&A partner at Wong & Partners, a member law firm of Baker McKenzie in Kuala Lumpur, noted, "There has been a notable pick-up in cross-border transactions as political stability returned to some markets just as pent-up demand for investments and dealmaking and adjustments to higher interest rates began to drive M&A activity again."
Japan Takes Center Stage in Cross-Border M&A
Japan has emerged as a key player in the region’s M&A boom. The country’s inbound M&A activity surged more than 16-fold this year to a record $74 billion, while outbound deals increased by 49% to $50 billion, according to LSEG data. This sharp rise in M&A activity has been fueled by changes in corporate governance regulations, which have made Japanese public companies more open to takeovers. At the same time, some of Japan's top corporations are seeking to expand their global footprint, driving outbound investment.
Bankers expect Japan to continue playing a central role in the region’s multibillion-dollar deals, particularly as relaxed corporate governance rules have paved the way for more significant acquisitions. The country’s evolving corporate landscape has caught the attention of international investors, as evidenced by Canadian firm Alimentation Couche-Tard’s $38.5 billion all-cash takeover bid for Seven & i Holdings, Japan's largest convenience store chain. This deal represents the largest announced M&A transaction globally in 2024 and highlights Japan's growing appeal as a target for international acquisitions.
M&A Across the Region: A Mixed Recovery
While Japan leads the way, the broader Asia-Pacific region has experienced mixed results in M&A activity. Overall, Asia’s M&A value totaled $622 billion in the first nine months of the year, a slight 0.2% decline from the same period in 2023. However, the cross-border segment has shown significant resilience, buoyed by a series of high-profile deals.
Southeast Asia has also seen a pick-up in cross-border M&A, with German insurer Allianz announcing plans in July to acquire a majority stake in Singapore’s Income Insurance for approximately $1.6 billion. This deal is part of Allianz's broader strategy to strengthen its foothold in Asia’s growing insurance market. In addition, Texas-headquartered real estate investor Hines has been actively acquiring assets in the region, particularly in Japan and Singapore, with plans to explore further opportunities in Australia.
Despite these successes, the M&A outlook remains uncertain in some parts of the region. China, in particular, has experienced a significant downturn in outbound deals. So far this year, China’s outbound M&A activity has totaled $14 billion, down 8% year-on-year, marking the second-lowest level in a decade. The slowdown has been attributed to a range of factors, including weak demand for Chinese goods abroad and regulatory challenges at home.
However, experts are optimistic about a potential rebound in China’s M&A activity. Rohit Satsangi, Deutsche Bank's co-head of M&A for the Asia-Pacific region, anticipates a resurgence in outbound deals by Chinese state-owned companies, particularly those seeking renewable energy and natural resource assets globally. “Looking forward, 50% of the APAC pipeline is made up of global cross-border transactions,” Satsangi said, highlighting the region's ongoing integration into global markets.
Outlook for M&A in Asia-Pacific
The outlook for M&A in the Asia-Pacific region is expected to improve in the coming years, particularly as interest rates stabilize and political uncertainties ease. The recent easing of interest rates by the U.S. Federal Reserve and the conclusion of the U.S. elections in late 2024 are likely to provide a more stable environment for dealmaking.
Andre Gan of Wong & Partners anticipates a resurgence in M&A activity heading into 2025 and 2026. “Heading into 2025 and 2026, considering the recent easing of interest rates by the U.S. Fed and conclusion of the U.S. elections in late 2024, we expect continuing stability to lead to a resurgence of M&A activity,” he said.
This resurgence is likely to be driven by a combination of factors, including the need for businesses to diversify their operations and adapt to a rapidly changing global economy. As companies across the Asia-Pacific region adjust to higher interest rates and rising geopolitical tensions, cross-border M&A is expected to remain a critical tool for growth and expansion.
The Asia-Pacific region’s cross-border M&A activity is on a path to recovery, with Japan leading the charge thanks to favorable corporate governance reforms and increased openness to foreign acquisitions. While challenges remain, particularly in China, the broader outlook for the region’s M&A market appears positive. As businesses continue to navigate the complexities of the current economic environment, cross-border deals are set to play a crucial role in driving growth and fostering greater international cooperation.
(Source:www.moneycontrol.com)