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A Record Start for Asia Pacific M&A

A Record Start for Asia Pacific M&A

The value of announced M&A deals involving Asia Pacific companies, excluding Japan, witnessed a record start and totaled US$243.0 billion so far this year, a 67.5% increase in deal value compared to the first quarter of 2014 (US$145.0 billion). This was driven by the announcement of two jumbo deals from the main companies of Hong Kong tycoon Li Ka-shing that had a combined value of US$60.8 billion. The average M&A deal value for disclosed deals grew to US$149.9 million compared to US$84.9 million in the first quarter of 2014.

Completed M&A activity involving Asia Pacific companies amounted to US$99.6 billion thus far, an 8.3% increase in deal value compared to the first quarter of 2014 (US$92.0 billion) despite a 13.7% decline in number of completed transactions.

Target Asia M&A Witnessed a Strong Start; China Remains Most Targeted Nation

M&A transactions targeting Asia Pacific witnessed the best annual start to any given year since records began with US$189.3 billion, a 51.3% increase compared to the first quarter of 2014. Chinese companies continued to be the preferred target by both domestic and foreign acquirers with US$80.3 billion, a 40.0% increase over a year ago, and captured 42.4% of Asia Pacific-target M&A activity. Hong Kong and Australia followed behind with 32.2% and 10.4% market share, respectively.

Telecommunications Industry Takes the Lead with 25% Market Share

The Telecommunications sector made up the largest portion of the acquisitions involving Asia Pacific companies with US$61.7 billion in deal value and captured 25.4% of the region’s M&A activity. This is the highest-ever quarterly period for the sector in terms of deal value. This was driven by two of Asia’s biggest M&A deals so far this year led by Li Ka-shing’s main companies. Cheung Kong Holdings Ltd’s planned to acquire the remaining 50.035% interest, which it did not already own in Hong Kong-based telecommunication services provider, Hutchison Whampoa Ltd for US$45.4 billion (including net debt).

Separately, Hutchison Whampoa Ltd agreed to acquire O2 PLC, a provider of wireless telecommunications services, from Telefonica O2 Europe PLC, ultimately owned by Telefonica SA, for US$ 15.4 billion.

The Industrials and Financials industry witnessed triple digit percentage increase and captured 20.3% and 12.2% of the market activity, respectively.

Buyside Financial Sponsor M&A Down 65% from 1Q 2014

Buyside Financial Sponsor M&A activity in Asia Pacific slowed down and amounted to US$3.1 billion, a 64.9% decline from the first quarter of 2014. This is the lowest first quarterly period for private equity-backed M&A in Asia Pacific since 2008 (US$2.9 billion). Majority of the private equity-backed M&A activity in the region was captured by China with 62.5% market share worth US$1.9 billion.

Top Deal: Cheung Kong Holdings Ltd Buys Remaining Stake in Hutchison Whampoa for US$45.4 billion

The deal flurry in Asia Pacific was driven by Li Ka-shing’s main companies as part of the reorganization of his diversified conglomerate into two new listed companies.

Cheung Kong Holdings Ltd planned to acquire the remaining interest in Hutchison Whampoa Ltd, to form CK Hutchison Holdings Ltd, in a stock swap transaction valued at US$45.4 billion (including net debt). The deal surpassed the biggest-ever M&A transaction involving Asia Pacific – CITIC Pacific’s US$42.2 billion acquisition of CITIC Group’s main asset in 2014.

Li Ka-shing companies also extended their buying spree overseas. This included Hutchison Whampoa Ltd’s US$15.4 billion pending acquisition of O2 PLC from Telefonica SA.

HSBC Leads Asia Pacific Announced M&A Financial Advisors

HSBC Holdings PLC moves up to take the top spot (from its 12th place position during the first quarter of 2014) in the financial advisory ranking involving Asia Pacific announced M&A deals so far this year, and captures 25.9% of the market share.

Goldman Sachs, which took the first place in the same period last year, slipped to third position in the first quarter of 2015 with 22.5% market share and US$54.7 in related proceeds.

Completed M&A Advisory Fees Drops 22.2%
According to estimates from Thomson Reuters / Freeman Consulting Co., M&A advisory fees from completed deals in Asia Pacific reached US$327.1 million so far this year, a 22.2% decline compared to the same period in 2014. Goldman Sachs currently takes the lead in the M&A imputed fees ranking on advisory work for completed M&A deals in Asia Pacific, with US$31.8 million in related fees, and captured 9.7% of the market share.

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