China

With deal volume and value decreasing, China still maintained its top spot in M&A for the North Asian region.   Continuing government intervention could be what is helping to stifle some deals, particularly domestic ones.   However, it seems as if in-bound buyers, although down in 2016, will have a favourable environment for 2017, hopefully helping to boost dealmaking in the country.  Obviously, China remains one of the largest outbound dealmakers in the world.  It actually grew its 2015 numbers by a healthy margin in 2016.

Japan

Japanese dealmaking has suffered from the internal issues the country faces: a struggling economy and an aging workforce.  Profitability as become an issue for numerous companies, and as such, domestic dealmaking has made up 84% of deal volume in 2016.   However, several key industry mergers on the horizon look to improve M&A activity for 2017.  Similar to China, outbound investing remained high, backed by a $30bn deal involving Softbank and UK-based semiconductor designer ARM.  

South Korea

South Korea took a significant hit in 2016, despite all signs pointing to another stellar year.  They lost nearly 50% in deal value between the two years, which is quite the drop.  Similar to China, however, they are also in the midst of some government-based changes to the corporate structure in the country.   This effect may have contributed to the down year, but the process is still ongoing and may effect H1 of 2017 or more.

2017 Outlook

Despite 2016’s down year overall, Q4 showed some promising figures.  This shows that investors are still confident, and that they are still pursuing deals in the area.   China will undoubtedly be important to 2017’s M&A activity, as the result of their restrictions on capital outflow and outbound deals take place.  Tech looks to continue to be the top sector, with industrials also being important to the M&A environment for 2017 and South Asia looks to be the next emerging market to jump in on early.

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30th March 2017 UTC

North Asia M&A: Towards Technological Convergence

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