Record $1.7 trillion in Asian deals this year

BEIJING • China's ravenous appetite for overseas assets is powering a record year for Asian dealmaking, with deal volumes in the region surpassing the US$1 trillion (S$1.4 trillion) mark for the first time. 

Acquisitions involving companies in the Asia-Pacific region rose 55 per cent this year to US$1.2 trillion (S$1.7 trillion).

Chinese buyers snapped up premier assets, ranging from the world's biggest luggage handler to Italian tyre brand Pirelli & C, and accounted for about half the deals from the region.

"The M&A market in China has come of age," Mr Brian Gu, JPMorgan Chase & Company's co-head of mergers and acquisitions for the Asia-Pacific, said in an interview in Hong Kong.

"We're seeing Chinese firms step up and pursue brands, expertise and intellectual property in order to move up the value chain."

Morgan Stanley was the biggest beneficiary of the deal-making boom, with a 17.6 per cent market share of Asia-Pacific transactions this year, followed by Goldman Sachs Group at 14.4 per cent.

The buyout of Qihoo 360 Technology management for US$8.4 billion was one of the biggest cross-border deals from China announced this year.    The security software maker's chairman is leading a group of investors attempting the buyout of a Chinese firm listed in the US, part of a wave of deals seeking to take advantage of a now-ended stock market rally back home.

 China National Chemical Corp's US$8 billion bid for the storied Italian tyremaker Pirelli stands out as the largest Chinese purchase in Europe. The state- owned firm, which agreed to leave Pirelli's management in place for at least four years, plans to combine the companies' truck tyre businesses and bring some of Pirelli's expertise to its Chinese operations.

ChemChina is also in discussions to buy Swiss seed maker Syngenta, people familiar with the matter have said. 

Meanwhile, Chinese biotechnology firm WuXi PharmaTech Cayman was acquired for US$3.3 billion. The firm's take-over became the biggest take-private deal this year to actually get done after it cleared the final hurdles earlier this month. The investors that acquired the company include Ally Bridge Group, Boyu Capital, Hillhouse Fund and Temasek Life Sciences. 

Not all of China's dealmaking went smoothly this year.

A US$23 billion offer for memory chip manufacturer Micron Technology by Tsinghua Unigroup in July would have been the largest takeover of a foreign firm by a Chinese company. But it was met with silence from Micron's board. They have never spoken publicly on the proposal; six months later, that remains the case.

Focus Media Holding, the outdoor advertising firm backed by Carlyle Group, failed in its first attempt to re-list in its home market in China.

The target shell company became the subject of a regulatory probe, and Focus dropped the US$7.4 billion deal.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'Record $1.7 trillion in Asian deals this year'. Print Edition | Subscribe