Salomon Smith Barney Inc advised on more takeovers involving companies in Asia outside Japan than its rivals this quarter, extending its lead in a market that has avoided a worldwide plunge in transactions.
There were US$30.1 billion of mergers and acquisitions in July, August and September to date, against US$31.8 billion for the full quarter a year earlier, according to Bloomberg data. That's as global takeovers are down about 40 percent.
"Government restructuring is driving the activity, especially in Taiwan and [South] Korea," said Gordon Paterson, head of mergers and acquisitions at Salomon in Asia. "This is also helping to push more domestic consolidation."
Much of the activity is being driven by efforts to solve the debt problems of Asian banks and companies that almost collapsed during the financial crisis of 1997-1998. Four years later, governments are still trying to sell state-owned banks and investment banks are making fees from the consolidation.
About two-thirds of the takeovers related to banks, financial institutions and insurance companies, according to Bloomberg data, as Taiwan, South Korea and Indonesia attempt to reorganize banking industries burdened by non-performing loans.
Cathay Financial Holding Co and Fubon Financial Holding Co, two of Taiwan's biggest banks, bought smaller rivals using shares in transactions together valued at US$5.7 billion -- the biggest deals in July, August and September to date. Salomon advised Fubon on its acquisition of Taipei Bank last month.
Regional activity
"Asia continues to show more activity than the rest of the world," said Todd Marin, head of mergers and acquisitions in Asia at third-ranked JP Morgan Chase & Co, which advised Cathay on its acquisition of United World Chinese Commercial Bank.
The number of takeovers in Asia, not including Japan, rose 13 percent to 1003 in the quarter to date, against a global drop of more than 25 percent.
The Asian tally accounts for 29 percent of the global total, up from 18 percent in the full quarter a year ago, and 12 percent of global takeover value, from 7 percent last year.
Asia's share has increased because of a slump in takeovers in the US, where chief executives focused on the economy, tougher accounting rules and a series of scandals related to bankruptcies and the transparency of investment banking.
ABN Amro Holding NV rose to second in the quarter to date from 12th a year ago, advising Vector Ltd on its acquisition of UnitedNetworks Ltd to make it New Zealand's largest electricity distributor, and Li Ka-shing's Hutchison Whampoa Ltd on its purchase of Dutch retail drug store chain Kruidvat Beheer BV.
Credit Suisse First Boston Inc dropped to 13th from fourth in the rankings.
The average size of each takeover in Asia has fallen to about US$30 million from US$35.6 million in the third quarter last year.
Stock prices have slumped since the frenzy of activity surrounding technology companies peaked in 2000.
That was when Pacific Century CyberWorks Ltd paid US$26.4 billion for HKT Ltd PCCW Ltd, as Hong Kong's dominant phone company is now known, lost 95 percent of its value since February 2000, closing at HK$1.19 on Friday.
A third of the value and a quarter of the deals have been in Australia during the quarter.
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