Asia Pacific M&A activity hit an all-time high in the first six months of 2021, with M&A values targeting the region increased to US$535 billion from US$284 billion in the same period last year, said EY recently when releasing a report.
Despite many parts of the global economy still operating under restrictions, cross-border transactions have staged an impressive comeback, increasing by almost three times year-on-year to US$159 billion, EY noted.
There were more than 50 deals over US$1billion announced targeting Asia Pacific so far this year, increasing by almost five times year-on-year, according to the firm.
The technology sector continues to lead deal activity in the region, accounting for almost one-third (28%) of the cumulative deal value in the first half of 2021, said EY, adding that M&A targeting technology companies hit a record high in the region, with deal value increasing by 88% year-on-year.
The advanced manufacturing and mobility sectors were the subsequent most active in terms of deal activity, the company noted.
“The pandemic has propelled innovation and significant business transformation across all industries. In the tech sphere, M&A activity in Asia Pacific has been fuelled by the emergence of next-gen technological applications, such as industrial Internet of Things (IoT), AI, electric vehicles and sustainable, fuel-efficient technologies,” said Yew-Poh Mak, EY Asia-Pacific Strategy and Transactions Leader.
For advanced manufacturers who pursued M&A, the primary activity has been bolt-on acquisitions in the same sector designed to increase market share or transformative deals that would enable a more sustainable business model, he added.
“Consolidation is a means for businesses to combine and complement their strengths to differentiate themselves and, in the technology sector, to focus more on a target’s business resilience, digital technology alignment, and to gain market share,” he noted.
Other report highlights
- Outbound value in Asia Pacific rebounded to pre-pandemic levels to US$85 billion.
- The inbound value reached a historical high at US$74 billion, jumping by more than 170% compared to the pre-pandemic average.
- Like Asia Pacific, the Americas and Europe have witnessed record growth, with transaction value totalling US$1.64 trillion – almost double the average seen in the five years prior to the pandemic – and US$653 billion, respectively.
- M&A activity in the renewable energy sector almost tripled globally in the first half of 2021, compared to the same period last year, as CEOs look to meet ambitious environmental targets through transactions.
- The value of these environmental, social and governance (ESG)-related deals has jumped from US$35.7billion in 1H 2020 to US$96.5billion in 1H 2021, according to the company.