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Big Deals (October 29) Print E-mail

Merger mania continues in Singapore, PE roaring back.

By Marine Cole

Merger mania continues to grip Singapore.

Singapore Exchange Ltd. plans to acquire Australia’s ASX for $8.2 billion, representing the biggest foreign takeover by a Singapore company this year. This is also the largest commodities and securities exchange targeted deal so far this year and the fifth biggest on record.

Altogether, acquisitions by Singapore companies have reached $20 billion so far this year, which represents the most activity seen since 2007 with $53.9 billion.

Australia is now the most popular foreign targeted nation by Singapore representing 43 percent of deals, followed by Hong Kong and China with 15 percent and 6 percent respectively.

The Singapore Exchange deal was received with concerns though, especially from the Tokyo Stock Exchange, which fears its stake in SGX might be diluted. Its current holding in Singapore Exchange of 4.99 percent could be diluted to about 3.1 percent, it said.

The exchange industry has already seen heavy consolidation in Europe and in the US. But if this deal goes through, it would be the first step toward consolidation in Asia, reported the Wall Street Journal this week.

Still in Asia, Industrial & Commercial Bank of China, the world’s largest lender by market value, agreed to buy a 60 percent stake in AXA’s China insurance venture, in its latest foray outside banking, Bloomberg reported Thursday. ICBC will pay about $180 million, while Paris-based insurer will retain a 27.5 percent stake.

“ICBC joins rivals China Construction Bank Corp. and Bank of China in seeking to reduce dependence on lending income,” Bloomberg wrote.

Meanwhile, back in the US, mergers and acquisitions activity continues to be strong in the health care sector.

Boston Scientific, which makes medical devices, said it has agreed to sell its neuromuscular business to Stryker, another medical device company, for $1.5 billion in cash, as Boston Scientific wants to focus on core operations.

In the private equity world, activity is picking up. CommScope, a telecommunications company, has agreed to sell to the Carlyle Group for about $3 billion in cash, a 36 percent premium over the company’s closing price on Oct. 22. Private equity firms Apollo Global Management and CVC Capital Partners are taking over Brit Insurance Holdings, an insurance company based in Amsterdam for $1.4 billion.

Leveraged buyout deals are finally starting to resurface, Reuters reported this week, which is boding well for earnings of private equity giants like Blackstone Group and Kohlberg Kravis Roberts.

Worldwide private equity backed-dealflow has doubled so far this year compared to last year, totaling $162 billion as of Oct. 18, according to recent data by Thomson Reuters.

“Private equity firms are under pressure to invest billions of dollars raised over the past few years, with some funds facing deadlines on their investment periods,” wrote Reuters. “That, along with improved financing markets has spurred recent deal activity.”

Blackstone, for example, is in the process of trying to buy US power company Dynegy and said in September that the debt markets have recovered to such an extent that it should be possible for a $10 billion LBO to happen soon.

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