Emerging markets have overtaken developed markets in both sales and purchases of foreign acquisitions – accounting for 56% of total cross-border transactions in 2013.
Author: Gilly Wright
Project coordinator: SJ Yun
Thompson reuters data shows global M&A activity totaled US $ 2.4 trillion in 2013, down 6% from 2012 levels, deal numbers at an all-time low for eight years and that cross-border mergers and acquisitions declined by 18% in 2103. Mergers and acquisitions activity totaled US $ 737.8 billion in 2013, representing 31% of the global merger volume and acquisitions and down 18% from 2012. Mergers and acquisitions involving companies located in emerging markets totaled US $ 675.2 billion in 2013, 2012 and represent 28% of worldwide activity announced.
Expectations of a rebound in cross-border M&A activity in 2013 did not materialize as transnational corporations (TNCs) maintained a cautious approach. The value of cross-border M&A sales increased only modestly by 5% to reach US $ 337 billion in 2013. This increase was mainly driven by transactions in East and South-East Asia, in particularly in China, Singapore and Thailand, while Latin America’s increase in revenue was due to a US $ 18 billion mega-deal in Mexico.
Value by region / country: Buyer’s side | Vendor side
Number of mergers and acquisitions by region / country: Buyer’s side | Vendor side
Emerging markets outperformed developed markets in both sales and purchases of foreign acquisitions – accounting for 56% of total cross-border transactions in 2013. The value of M&A sales in emerging markets rebounded in pre-crisis levels in 2013, increasing by $ 64.88 billion. Almost 68% of acquisitions came from other developing countries (up from around 50% in 2006) and included record acquisitions by Chinese and Russian companies. Africa has seen the fastest increase in negotiators’ appetites, with the share of global M&A activity rising from 4% to 7%.
Cross-border sales to developed countries declined by around 10% on both sides of the Atlantic. Sales of cross-border mergers and acquisitions within NAFTA in 2013 remained at the same level as the previous year, although UNCTAD World Investment Report 2014 suggests that this stability hides significant changes in their regions of origin, with significant increases in acquisitions in developing economies (+ 63% to $ 37 billion) and a decrease in developed countries (-21%). A number of developed countries such as Australia, UK, France, Ireland and Spain made significant divestments from NAFTA in 2013.
UNCTAD believes that confidence is returning to Europe. Germany, for example, has more than doubled its sales with a few major deals, including Vodafone’s acquisition of Kabel Deutschland for US $ 7.7 billion. The increase in FDI flows to Japan in 2013 was mainly due to a number of mega-deals, including the US-based Micron Technology Inc’s merger with Elpida Memory Inc for $ 2.5 billion. . Europe was the most important target market for traders looking outside their home markets in 2013, with 38% of transactions by value taking place in the region. In contrast, North America, which recorded the same amount of inbound M&A spending as Europe in 2012, was only the target of one in four deals last year.