Mergers and acquisitions targeting technology companies have hit a record high in Asia Pacific. As the pandemic spurs a shift toward virtual activities in the economy, dealmakers expect this M&A pace to continue. This is shown by the dealogic data.
In 2020, Tech M&A has totalled $136.2 billion. This is more than double the year-ago levels. Tech deals accounted for 28% of the region’s overall M&A transactions. In at least a decade, this is the highest share. These are all shown by the dealogic data. Jung Min, co-head of M&A and Technology, Media and Telecom at Goldman Sachs in Asia (ex-Japan) stated that this boom is a result of technology changing the way their economy works.
Jung also added that for a consumer, it affects how they shop, pay, eat, move and entertain. For a business, it affects how they recruit top employees, source their supply chain, manufacture and, of course, sell to customers. He even said that M&A is transformational for businesses to ensure they have the required scale to win in this environment.
A survey by law firm Baker McKenzie shows that corporate executives are also bullish on the sector. In the next 12 months, the survey of 800 senior executives in Asia Pacific shows over three quarters of the respondents predicting tech deals would increase markedly. 92% said technology, media and telecoms companies would drive their own deal activity. 57% said they would acquire new technology and associated expertise. These were all from the survey conducted in the first quarter.
The report concluded that as fast growth companies snap up rival firms and complementary platforms, and move into new markets, it signals major consolidation across the tech sector. The largest ride-hailing and food delivery firm in Southeast Asia, Grab Holdings, in April, went public in the world’s biggest $40 billion merger with a special purpose acquisition company. Grab’s rival Gojek and e-commerce leader Tokopedia have also announced a merger to create a multi-billion-dollar tech company in Indonesia’s largest-ever deal.
Mega deals in the pipeline also include a possible take-private of Japan’s Toshiba Corp. To advise on a strategic review, Toshiba has hired UBS. This is amid calls from shareholders to explicitly seek offers from potential suitors after it dismissed a $20 billion take-private bid from CVC Capital this year.