Mergers and acquisitions (M&A) activity in 2011 for Asia-Pacific and Japan surpassed global averages in both volume and value, although most of the deals were corporate restructuring in reaction to volatile market condition. The economic volatility is likely to plague the M&A industry throughout this year, too.
According to Ernst & Young's global technology M&A update and 2011 review issued Tuesday, the region's full-year 2011 volume increased 19 percent to reach 552 deals, with China accounting for 36 percent, or 197, of these deals. Asia's percentage growth compared favorably with the global growth of 13 percent. The total global volume of disclosed and undisclosed value deals hit 3,006 for 2011, from 2,658 in 2010, it added.
In terms of deal value for disclosed deals, the global aggregate figure reached US$167.7 billion, which is an improvement over 2010's US$119 billion and represented a 41 percent spike. But Asia-Pacific and Japan experienced a bigger jump of 48 percent to achieve US$24 billion last year, the study revealed.
"Megatrends" drive deal-making
Ernst & Young went on to point out five tech "megatrends" that were at work in driving much of the M&A activities for the past year, and these were namely "smart mobility, cloud computing, social networking, big data analytics and cross-sector and cross-industry blur".
Within Asia-Pacific and Japan, most of the deals that took place were attributed to companies "restructuring in preparation for strategic growth in social, mobile, and cloud computing", it added.
These activities include Sony selling its stake in the LCD display joint venture with Samsung, as well as buying over its partner Ericsson's 50-percent stake in their mobile phone joint venture for US$1.47 billion--both of which took place in October last year.
Zooming in on these megatrends, Ernst & Young said established companies made "major consolidation plays" in 2011, and placed big bets on smart mobility, which includes Internet and mobile video technologies, cloud computing and business intelligence and analytics. As a result, there were a strong of multibillion-dollar deals with 34 deals topping US$1 billion over the 12-month period, it noted.
Semiconductor consolidation also drove these big-ticket deals, with 5 of the year's top 10 M&A transactions, worth a combined US$21.2 billion, linked to established semiconductor companies as both buyer and target, the study showed.
At the same time, about 100 to 150 smaller deals helped illustrate the strategic importance of certain technologies, particularly social networking and security as well as healthcare information technology, online and mobile games, and advertising and marketing tech, the report stated.
Joe Steger, global technology transaction advisory services leader at Ernst & Young, commenting on these findings, said: "The disruptive megatrends of social-mobile-cloud and 'big data' analytics have helped fuel a significant rise in global technology M&A activity since 2009 despite a slight pullback due to macroeconomic pressures in late 2011."
However, he pointed out that given the return of economic volatility worldwide, 2012 could be a slow-growth year for global technology M&A.
"The same pressures suggest we might be in for slow growth in 2012. In addition, some deal-makers will be focused on the integration challenges involved in the big bets they placed during 2011," Steger stated. "But the long-term outlook for technology M&A remains strong due to ongoing disruptive technology innovation."