Taiwanese firms are cautiously optimistic about mergers and acquisitions (M&As) over the next five years to expand their operations and economic scale, unfazed by the economic slowdown and interest rate hikes, PricewaterhouseCoopers (PwC) Taiwan said yesterday, citing a survey.
Eighty-one percent of respondents said they would be more active in M&As, higher than 71 percent last year, PwC M&A and real estate head Jason Liu (劉博文) told a forum in Taipei.
Firms expect M&A prices to remain flat or decline, suggesting they are expecting price corrections, Liu said.
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Suppliers of electronic components were the most popular M&A targets at 39 percent, followed by biotechnology and medicine companies at 29 percent and semiconductor firms at 28 percent, the survey found.
The findings make sense given that there has been a 45 percent increase in output from Taiwanese electronics companies over the past five years, Liu said.
That explains why fingerprint sensor supplier Egis Technology Inc (神盾) last year acquired a 23 percent stake in CMOS chip designer Silicon Optronics Inc (晶相光) to increase its access to the auto market and security monitor controls, it said.
At the same time, the healthcare and precision medicine industries have huge business potential because the world’s population is aging, Liu said.
It is not surprising that semiconductor firms are also gaining attention as M&A targets, as the industry’s output last year spiked 18.5 percent to US$162.3 billion, he said.
The attitude of companies toward M&A deals is changing, as they are being used as a tool to secure business alliances and replace competition with collaborative partners, Liu said.
A majority of respondents, 56 percent, said that they favored the alliance approach, when tapping business in fields in which they do not know enough about the business models, supply chains and customers, he said, adding that 82 percent preferred owning stakes of more than 20 percent.
Eighty-six percent of the respondents said that they would like to keep M&A deals below US$100 million to achieve the best business scale and synergy benefit, Liu said.
Forty-three percent said they would consider divestment options to ease financial burdens and channel resources into areas with growth potential, he said, adding that portfolio adjustments, shuttering non-core businesses and strategy changes were the main reasons given for divestment decisions.
Southeast Asia, the US and Japan topped the list of M&A destinations, as local firms are increasingly shifting attention away from China, Liu added.
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