APAC tech M&A up in Q2 amid global decline

Ernst & Young study shows video games, including online and social games, driving Asia-Pacific and Japan's merger and acquisitions volume and deal value growth even as global figures fall.

Merger and acquisitions (M&A) activities among tech companies in Asia-Pacific and Japan grew during the second quarter of 2012, bucking the overall global trend which experienced a drop in aggregate deal value, says one report.

In its global technology M&A quarterly update released Thursday, Ernst & Young reported a higher sequential and year-on-year volume of tech M&A deals in the region. The exact figures were not disclosed though.

It noted that video games, including online, mobile, and social games, were the biggest driver of deal values in Asia. These are in addition to the many small strategic deals focusing on geographic expansion or technologies such as mobile audio, video streaming, and flash memory acceleration.

Global decline due to uncertainty
The growth experienced in Asia-Pacific and Japan was not seen globally though, as the volume of deals fell from 729 to 728 from the same time last year. Aggregate deal value dropped 43 percent to US$33.4 billion too, the research showed, attributing the decline in both to macroeconomic uncertainty.

Driving M&A activities worldwide were five top megatrends--smart mobility; cloud computing; social networking; big data; and cross-industry technologies. Cloud computing generated the highest volume and value of all M&A transactions, it stated.

Of the quarter's top 10 deals, 4 were cloud-driven acquisitions.  One was the purchase of a software-as-a-service (SaaS) company which hosts Web-based business-to-business (B2B) business exchange, two involved non-tech companies buying data centers to offer cloud services, and the last was the purchase of a cloud hardware and software company.

Joe Steger, global technology industry transaction advisory services leader at Ernst & Young, said in the report: "Disruptive technology megatrends continue to fuel strategic deal-making around the world, in spite of a difficult economic context. In the second quarter, we even saw new sub-trends emerge to drive deals, such as alternative input technologies like speech and handwriting recognition, in addition to the 'social-mobile-cloud' and big data analytics deal drivers."

Steger added that while the current macroeconomic challenges might dampen the appetite for large, transformative deals in the near term, the industry will continue to see small and strategic deals revolving around the five megatrends.

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