Companies in China and Japan are to continue their pursuit of overseas mergers and acquisitions (M&As) this year amid the economic growth slowdown and geopolitical uncertainty, according to JPMorgan Chase & Co.
The ready availability of capital would enable Chinese buyers to have strong purchasing power, JPMorgan said in this year’s global M&A outlook report.
Chinese companies are expected to be “reasonably active” in seeking strategic acquisitions outside their home market to gain access to technology, well-known brands, distribution networks and natural resources, JPMorgan said.
Chinese outbound deals fell 25 percent last year to US$127 billion, down from the record US$239 billion foreign acquisition wave in 2016, data compiled by Bloomberg showed.
Last month, an investor group led by Anta Sports Products Ltd (安踏體育) agreed to spend US$5.2 billion for Wilson tennis racket maker Amer Sports Oyj.
Slowing growth in China is pushing companies to identify attractive opportunities abroad, JPMorgan said.
Deals in China this year might also get a boost as the country loosens foreign investment restrictions in more industries, including vehicles and financial services.
Some domestic companies would also push ahead with asset sales as they deleverage amid Beijing’s push to control financial-sector risk, the report said.
In Japan, firms would continue to pursue large acquisitions overseas, as well as some asset disposals to boost growth, the report said.
The biggest acquisition worldwide last year was Takeda Pharmaceutical Co’s US$62 billion takeover of Shire PLC.
Global M&A activity this year is expected to remain strong, the report said.
Shareholder activism, as well as the rising heft of alternative capital sources such as sovereign wealth funds and family offices, would drive some of those transactions, it added.
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