First-half M&A deals in S'pore up 19% to $45.7b

Activity at highest since Q1 of 2014; average deal size also up

Merger and acquisition (M&A) activity here in the first half hit heights not seen since the first quarter of 2014.

The total value of deals came in at  US$33.8 billion (S$45.7 billion), up 19.1 per cent on the first six months of last year.

The figure - based on data as of yesterday - was driven mostly by activity in the second quarter, according to a preliminary review by Thomson Reuters.

Deals in the second quarter totalled US$21.6 billion, up 76.8 per cent from the first three months of the year and 23.4 per cent higher than in the same quarter last year.

Average deal size also rose, from US$86.8 million in the first half of last year to US$127.1 million this year.

Domestic M&A activity totalled US$3.8 billion, 7.5 per cent more than in the first half of last year. This was despite a 22.9 per cent fall in the number of domestic transactions.

The property, financial and industrial sectors accounted for 75 per cent of domestic M&A activity in the first half. Property deals alone reached US$10.4 billion, or 30.9 per cent of activity.

Private equity-backed M&A deals were valued at US$166.2 million, the lowest first-half period in terms of deal value since 2013. However, the number of private equity-backed acquisitions grew 14.3 per cent.

Cross-border deal activity amounted to US$16.8 billion, an 11.8 per cent fall from the US$19 billion recorded last year.

This was due in part to a 52 per cent decline in inbound M&A activity to US$4.3 billion, the lowest first-half period since 2013.

The retail sector, which snagged deals totalling US$2 billion, accounted for 46 per cent of Singapore's inbound M&A activity in the first half.

Furthermore, Alibaba's plan to raise its interest in online retailer Lazada for US$2 billion made China the most active acquirer in terms of deal value, capturing half of Singapore's inbound activity, Thomson Reuters said.

Japan was second, capturing 25.9 per cent of market share, while the United States was third with 7.1 per cent.

Outbound M&A activity increased 24.5 per cent from last year to US$12.4 billion, despite a 23.2 per cent decline in number of announced outbound acquisitions.

Materials was the most targeted sector, capturing 36.9 per cent of Singapore's outbound activity, with US$4.6 billion worth of deals.

This was driven by sovereign wealth fund Temasek's pending agreement to raise its stake in German pharmaceuticals player Bayer to 4 per cent for US$3.7 billion.

It was the biggest M&A deal involving a Singaporean company in the first half of the year.

Thomson Reuters said: "This bolstered Germany as the most targeted nation for Singaporean overseas deals so far this year, in terms of value, accounting for 29.8 per cent market share."

The US accounted for 13.1 per cent, and China, 12.1 per cent of outbound M&A activity.

A version of this article appeared in the print edition of The Straits Times on June 19, 2018, with the headline 'First-half M&A deals in S'pore up 19% to $45.7b'. Print Edition | Subscribe