Year-end M&A report

The year 2023 was a testament to strategic ingenuity as companies embarked on acquisitions and divestments to either enhance their portfolios or optimize their operations.

Despite the initial challenges of high interest and inflation rates, the business landscape responded with resilience. The latter part of the year saw a promising shift with high deal values in October that soared to US$412bn. While there was a modest dip in the total number of global deals, the global M&A space flourished, especially in the fourth quarter. The energy sector emerged as a prominent player, underscored by the landmark US$65.3bn merger between Pioneer Resources and ExxonMobil Corp.

Asia Pacific remained a strong region for deals, despite lower volumes, thanks to lucrative deal performance in sectors such as industrials, automobiles, and healthcare. Deals in the Asia Pacific region were around 30% of the global deal count in 2023, with Southeast Asia contributing the largest deal in the region through the acquisition of VinFast Auto by Black Spade Acquisition for US$23.1bn.

The thriving sectors in the 2023 deal landscape in Southeast Asia and the Philippines offer valuable insights into the expected developments over the coming years, supported by cross-border investments and modernization efforts. The technology, renewable energy, and telecommunication sectors are experiencing significant growth, driven by government initiatives to foster industry expansion.

These initiatives attract foreign expertise through inbound deals, and enable outbound deals, to facilitate business expansion strategies. Collaboration among these thriving sectors plays a crucial role in scaling up production processes, driving growth in emerging economies, enhancing supply chain capabilities, and implementing advanced manufacturing technologies and techniques.

_{Source: Mergermarket, ION Analytics, S&P Global}

M&A highlights in 2023

Asia Pacific deal activity

Geopolitical factors have shifted international business deal trends in Asia Pacific. Business transactions involving China, the United States, and Canada decreased by 34%, totaling US$8.9bn. On the other hand, other countries in the region, like Japan, are witnessing a rise in international agreements. The US$22bn joint development deal between the United States' Merck & Co and Daiichi Sankyo is seen as a positive indication of growing confidence among foreign investors.

Strong sector performance

Individual sector M&A performance in the Asia Pacific defied expectations and remained robust throughout the year. The healthcare sector had an impressive total deal value of US$95.8bn. Meanwhile, the automotive industry experienced an 80.1% surge in deal volume that can be attributed to the rapid rise of electric vehicle production. Not only has it captured the attention of industry giants like Volkswagen and Stellantis, but it has also lured them into the Chinese market.

_{Source: Mergermarket, ION Analytics, S&P Global}

Renewable energy development

There is a pressing need for power infrastructure in the Asia Pacific region as about 56.3% of the region's infrastructure needs are related to power, according to the Asian Development Bank.

Vietnam and Singapore are taking bold steps towards a greener future, aiming to make a significant portion of their energy portfolio renewable by 2030. These ambitious plans not only address environmental concerns but also attempt to reduce dependence on fossil fuels and the impact of climate change. Other exciting developments are underway such as Indonesia's Perusahaan Listrik Negara signing 14 agreements to transition away from coal plants and embrace cleaner energy sources. The Philippines is also making strides in renewable energy with the acquisition of SP New Energy Corp. by MGen Renewable, which can significantly boost the contribution of renewables to the country’s energy mix.
 

M&A in the Philippines

The Philippines has emerged as one of the most dynamic and rapidly growing markets in Southeast Asia. In the third quarter of 2023, the country achieved an impressive GDP growth rate of 5.9%, showcasing its robust economic performance. With the government projecting a full-year growth rate of 5.6%, driven by strong consumer spending and increased foreign direct investments, the future looks promising for the Philippines.

Despite the challenges posed by the global capital markets, foreign investors are recognizing the vast opportunities that lie within the telecommunications, energy and healthcare sectors of the country. The Philippines has established and implemented progressive laws, including the Public-Private Partnership Act, the Foreign Investments Act and the Retail Trade Liberalization Act, which have not only stimulated foreign investments but also attracted inbound investment, fueling the country’s economic growth.

Key highlights for 2023

^{Source: Mergermarket, IMF}

GDP growth rate in SEA countries (in %)

Philippine M&A

As a part of the Southeast Asian M&A landscape, the Philippines had 87 deals for 2023. Throughout the year, the country’s energy & natural resources sector witnessed the highest number of deals at 18. Majority of the deals in this sector were driven by the shift to more sustainable and renewable energy in the country, as seen in the growing investments in clean energy and the government’s initiative to achieve its green energy targets. Alongside the renewable energy sector, the country’s standout industries include consumer & retail, financial services, industrials and technology sectors. M&A transactions under these sectors were primarily propelled by the country’s improving economic growth, expansion plans of companies, and government initiatives such as the Retail Trade Liberalization Act and Common Tower Policy.

Top sectors

Based on deal count

Notable deals