Japan and Australia are emerging as some of the strongest pockets of M&A activity in Asia as dealmakers contend with geopolitical uncertainty, higher costs and valuation differences that continue to weigh on transactions across the region, according to a report by Bloomberg.
Advisers are nevertheless entering the final quarter of the year with cautious optimism that activity can pick up, particularly in markets where corporate governance reforms, private equity capital and strategic acquisitions are supporting deal flow.
Asia-Pacific M&A volumes fell 8% year-on-year to about $311bn in the third quarter, according to Bloomberg data, while Japanese deal activity also declined from the same period a year earlier. Higher interest rates, rising energy costs and continued disagreements over valuations between buyers and sellers remain obstacles to transactions.
Japan is nevertheless seeing an increasingly competitive takeover environment. Corporate governance reforms have encouraged companies to reconsider their strategies and prompted more boards to engage with potential buyers.
The battle for Japanese price-comparison website Kakaku.com is one example. EQT has repeatedly increased its offer in a contest with Bain Capital and LY Corp, with its latest proposal reportedly raised by JPY1.
Australia has delivered an even stronger increase in activity. M&A volume in the country almost doubled to about $55bn, with further large transactions potentially in the pipeline.
Gold Fields’ proposed takeover of Northern Star Resources, valued at roughly $27bn, was recently rejected by the Australian gold producer, although the South African miner is considering an improved offer. Meanwhile, EQT has launched a bid for waste-management company Cleanaway Waste Management in a transaction valued at about $4.9bn.
Private equity firms are expected to remain important contributors to deal activity as sponsors seek to deploy uninvested capital while also exiting mature portfolio companies. Strategic buyers are also assessing acquisitions and disposals as they reshape businesses and pursue growth.
