Cross-border mergers and acquisitions (M&A) activities involving Asia-Pacific companies have significantly revived this year, even flourishing in Japan, as firms seek new growth avenues in response to rising interest rates. According to LSEG data, the total value of announced cross-border transactions as of September 30 has increased by 25% year-over-year, reaching $286 billion, with around 80% involving entities outside Asia.
Andre Gan, a partner at Wong & Partners, a member firm of Baker McKenzie, noted that as some markets regain political stability and adjust to rising interest rates, pent-up investment and transaction demands are driving the resurgence of M&A activities. This has resulted in a notable rise in cross-border deals.
LSEG data also indicates that overall, the total M&A value in Asia for the first nine months of the year is $622 billion, a slight 0.2% decrease compared to the same period in 2023.
The revival of cross-border M&A has been partly driven by several major deals, including the $38.5 billion all-cash acquisition of Japan’s convenience store chain 711's parent company, Seven & i Holdings, by Canadian firm Alimentation Couche-Tard. This is the largest M&A deal announced globally this year.
Bankers suggest that Japan will continue to drive multi-billion-dollar transactions in Asia due to its lax corporate governance rules, which make Japanese listed companies more open to acquisitions. Some local champions are also seeking to expand overseas. LSEG's data shows that domestic M&A transactions in Japan have surged over 16 times to a record $74 billion, while outbound M&A deals increased by 49% to $50 billion so far this year.
Ng Chiang Ling, Chief Investment Officer for Asia at Texas-based real estate investment firm Hines, stated this month that as of June 30, the firm owned and managed $93 billion in assets and is actively seeking global opportunities, including in Asia. Hines has made acquisitions in Japan and Singapore this year and sees potential opportunities in Australia.
In Southeast Asia, cross-border deals are on the rise. In July, German insurance company Allianz announced plans to spend approximately $1.6 billion to acquire a majority stake in Income Insurance in Singapore, cementing its foothold in Asia.
Rohit Satsangi, Co-Head of M&A for Asia-Pacific at Deutsche Bank, mentioned that looking ahead, 50% of transactions in the Asia-Pacific region will involve global cross-border deals. He also expects Chinese state-owned enterprises to revive their search for renewable energy and natural resources assets worldwide.
The rebound in the Chinese stock market is likely to be welcomed by dealmakers. However, LSEG data reveals that China's total outbound transaction value so far this year is $14 billion, down 8% year-over-year, marking the second-lowest level in the past decade.
Gan from Wong & Partners expressed optimism about the overall M&A outlook in the region, including non-cross-border transactions. He anticipates that entering 2025 and 2026, ongoing stability driven by the Fed's recent rate easing and the conclusion of the 2024 US elections will lead to a resurgence in M&A activities.
