Bumper quarter of mergers and acquisitions

Nearly $45b worth of deals racked up, with activity up 31.7% so far this year: Report

The appetite for mergers and acquisitions (M&As) has been ravenous among local companies this year, with the value of deals the highest for the year to date since 2014.

Singapore companies racked up M&As worth US$33.1 billion (S$44.7 billion) in the third quarter, up 81.4 per cent on the second, despite a 33.9 per cent drop in the number of announced deals.

The bumper quarter reflects what has been a busy year so far, with M&A activity hitting US$62.5 billion since Jan 1, up 31.7 per cent over the same period last year, according to Thomson Reuters yesterday. The same three months in 2014 recorded deals of US$67.7 billion.

The average M&A deal size for disclosed deals was US$143 million since Jan 1 to Sept 14, compared with US$106.9 million for the first nine months last year.

There were also more Singapore companies participating in deals above US$1 billion, including the US$16.4 billion buyout of Global Logistic Properties (GLP).

The Thomson Reuters report said that there have been 15 M&As valued in excess of US$1 billion so far this year, with a combined value of US$35.9 billion.

This compares with 10 in the same period last year, when the total value was US$21.9 billion.

The industrial sector has led the way this year, accounting for 35.6 per cent of M&A activity worth US$22.3 billion - up 152.8 per cent from the same period last year.

"This is the highest-ever period for the sector in terms of value, surpassing the record annual high in 2015 of US$13.3 billion," the report said.

This was boosted by China's Nesta Investment Holdings acquiring the entire share capital of GLP, a Singapore-based provider of warehousing and storage services, from GIC for US$16.4 billion, including net debt.

The reported noted: "The deal also pushed China as the most active acquirer in terms of deal value, capturing 70.9 per cent of Singapore's inbound activity."

The United States followed with a 9.5 per cent market share of inbound activity, then Japan with 6.8 per cent.

Cross-border deal activity rose 55 per cent to US$40.2 billion from the previous nine months.

Domestic M&A activity has improved 12.3 per cent in deal value this year to reach US$11.3 billion.

Foreign acquisitions targeting Singapore-based companies in the third quarter reached US$19.3 billion, a stark 213.8 per cent increase over the third quarter last year. This was despite a 11.9 per cent drop in the number of deals.

This was why Singapore's inbound M&A activity has rocketed 130.2 per cent to a record US$27.3 billion so far this year, surpassing the annual record level in 2012 of US$23.5 billion for the first nine months or so.

Said the report: "Six out of the top 10 outbound deals this year targeted real estate, led by Mapletree Investments' acquisition of the student housing portfolio of United States-based Kayne Anderson Capital Advisors, ultimately owned by Virtus Investment Partners, for an estimated US$1.6 billion."

A version of this article appeared in the print edition of The Straits Times on September 15, 2017, with the headline 'Bumper quarter of mergers and acquisitions'. Print Edition | Subscribe