Confidence Restored

The annual value of deals in Asia-Pacific has increased significantly since 2008, driven by the appetite for acquisition demonstrated by Chinese firms. But the first half of 2017 saw a sharp downturn in outbound Chinese deal flows as capital controls tightened and regulators—in international markets and at home—scrutinised deals more closely, signalling tougher times ahead. M&A activity in Western Europe lagged in the years after the 2008 financial crisis on account of a protracted economic slowdown. But deal levels look positive in the first half of 2017 when all announced deals are included. There are also a number of sector-specific trends shaping M&A activity. In consumer goods and services, Amazon’s US$13.7bn offer for Whole Foods signals another phase in the global scramble to respond to changing shopping habits and distribution channels. The wide market reach of financial technology (fintech) has caught the attention of established financial services companies that are seeking to adapt their business models. In media and telecommunications, deals to marry content with distribution are emerging.

While technology titans such as Amazon and Google have the cash to spend, not all deals make sense and not all are certain to reach completion. Low interest rates and corporations flush with cash have been fuelling higher valuations, but shareholders are paying close attention to deal fundamentals—securing growth opportunities and cost efficiencies through synergies. Overall, experts interviewed for this research are optimistic. With the European economy finally back on track, all regions could experience a busy 12 months as buyers seek growth through acquisition, technological prowess and brands that fit their long-term strategies. In the chapters that follow, we will first explore broad trends influencing the levels and types of M&A activity across sectors and regions, followed by sectoral deep dives into consumer goods and services, financial services and media and telecoms.