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Big Deals (September 24) Print E-mail

Mid-market merger and acquisition activity surges in the Asia Pacific region.

By Marine Cole

Mid-market merger and acquisition activity in the Asia Pacific region is on the rise as concerns surrounding a China economic slowdown have abated and growth in the rest of the region remains strong.

August produced 893 mid-market M&A transactions in the Asia Pacific region for a total value of more than $7.2 billion, an increase of more than 4 percent compared to the $6.9 billion of deals announced in August 2009, according to data compiled by Thomson Reuters.

Mid-market transactions are those below $100 million.

In the first eight months of this year, there were 7,058 transactions compared to 6,676 recorded in the same period last year. The total value for this year amounted to $57.1 billion, a 29.8 percent increase from last year's $44 billion.

In the league tables, Deloitte was the leading financial advisor by deal count, advising on 41 deals for a total value of $300.6 billion. Ernst & Young came in second with 35 deals worth $883.4 billion, followed closely by PricewaterhouseCoopers with 34 deals totaling $444.6 billion.

The sector with the largest share of mid-market M&As in the Asia Pacific region was the materials industry at 21 percent of the total market, followed by the financial services industry at 15 percent and industrials (12 percent).

In Australia and New Zealand specifically, the sector with the largest share of mid-market M&As was materials, at 37 percent, followed by real estate at 11 percent and energy and power at 10 percent.

Asia also made news this week outside of the mid market with a slew of acquisitions, or at least speculation they may soon happen. A Chinese automaker, Shanghai-based SAIC Motor, expressed interest in buying a stake in General Motors once it holds an initial public offering some time later this year, according to the New York Times.

SAIC has had a longtime partnership with GM in China. The US automaker is planning to hold its IPO in November, giving the Treasury Department its first opportunity to begin selling off the 61 percent stake in GM owned by American taxpayers, the newspaper wrote.

In addition, Noble Group, a Hong Kong commodities firm partly owned by the Chinese government, said it had agreed to buy the electric retail business jointly owned by Sempra Energy and Royal Bank of Scotland. The transaction was worth $582 million including debt.

Asian, and in particular Chinese companies, are just about everywhere in the world where they are businesses to purchase. Reuters Breakingviews reported this week that two Chinese state-owned companies are considering a stake in OGX of Brazil and that there's talk of a Chinese bid for part of BP's Argentine joint venture.

China's interest in Latin America partly reflects rising barriers in some developed countries though, according to the article, mentioning Canada, Australia and the U.S., which have erected defenses around mining and agricultural resources. "China's conquistadores are blazing a trail into South America," it wrote.

Even Bollywood, the Indian movie industry, may soon take over Hollywood. One of India's top film producers, Sahara India Pariwar, is interested in Metro-Goldwyn-Mayer, according to Reuters.

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