YTD value of disclosed M&As involving local firms dives 53%

Singapore

It has been a slow start for disclosed mergers and acquisitions (M&As) involving Singaporean companies so far this year, as the value fell 53.8 per cent year on year to US$6.5 billion, in tandem with a 33.5 per cent drop in the number of announced deals.

The average M&A deal size for disclosed deals was 22.9 per cent lower at US$87.1 million in the first quarter of 2016, partly due to lower deal activity involving Singapore companies, said a Thomson Reuters report.

Only one such deal in Q1 was valued above US$1 billion, compared to four deals in the same period last year.

The report said that M&A transactions under the US$200 million to US$500 million deal size reached an aggregate total of US$1.9 billion and accounted for 29.6 per cent of the Singapore-involvement M&A with disclosed value.

Total cross-border deal activity came up to US$5.1 billion, a 24 per cent decline over the same period last year, due largely to a decline in Singapore's inbound M&A activity, which plunged 86.1 per cent in deal value from a year ago.

Domestic M&A activity also slowed down to US$753.3 million, representing an 82 per cent decrease in deal value year on year - the slowest Q1 period since 2009 (US$239.8 million).

The report said that outbound M&A activity reached US$4.3 billion, a threefold increase in value from over a year ago.

Within the different sectors, media and entertainment M&As involving Singapore firms hit US$3.3 billion, accounting for 49.9 per cent of the market share.

It was driven by a pending deal in March, where Singapore- based Amare Investment Management Group, a special purpose vehicle set up by Singapore-based Glory Fund Management Group, agreed to purchase 19 hotel assets in China and overseas from Greenland Holdings for US$3.2 billion.

Consumer products and services followed with a 12.7 per cent market share totalling US$831.8 million so far this year, while the industrials sector captured 11.6 per cent of market share and witnessed the most number of disclosed M&As.

Buy-side financial sponsor M&A activity in Singapore rose 7.2 per cent to US$368.6 million so far this year, making it the strongest start to a year in terms of deal value since 2010 (US$425.0 million).

The industrials sector accounted for 95 per cent of the market share with US$350.3 million worth of deals from two announced transactions, the report said.

So far in 2016, foreign acquisitions targeting Singapore-based companies reached US$731.9 million, down 86.1 per cent in deal value. This is the lowest start to a year since 2012 when deal value for inbound acquisitions in Singapore reached US$227.2 million.

The report said that the industrials sector accounted for 57.3 per cent of Singapore's inbound M&A activity followed by consumer products and services with 38.8 per cent market share.

Currently, the United States is the most active acquirer in terms of deal value, capturing 49.2 per cent of the inbound acquisitions in Singapore, while China and Japan trail behind.

Singapore outbound M&A totalled US$4.3 billion so far this year, up 212.4 per cent after coming off to a slow start in Q1 2015, making it the strongest Q1 for the Republic's overseas acquisitions since 2014 when deal value reached US$14.8 billion.

The media and entertainment sector is the most targeted sector so far this year, accounting for 75.4 per cent of Singapore's outbound activity, with US$3.3 billion worth of deals.

The report also found China to be the most targeted nation making up 75.8 per cent or US$3.3 billion of Singapore's outbound activity.