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Tech firm mergers and buy-ups double in worth to $136 billion
In April, Grab Holdings went public in the world's biggest $40 billion merger. Photo: Reuters

M&As in Asia’s technology sector are now the main deal driver in the region as fast-growing companies snap up rival firms and complementary platforms

 

Mergers and acquisitions involving technology companies have hit a record high in the Asia-Pacific region – and dealmakers expect the pace to continue as the pandemic accelerates the shift towards virtual commerce.

Tech M&A totalled $136.2 billion in 2020, more than double the year-ago levels, according to data provider Dealogic. 

Tech deals accounted for 28% of the region’s overall M&A transactions, which totalled $482.4 billion as of Wednesday, the highest share in at least a decade.

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This boom “is a result of technology changing the way our economy works”, said Jung Min, co-head of M&A and Technology, Media and Telecom at Goldman Sachs in Asia (ex-Japan). 

“For a consumer, it affects how you shop, pay, eat, move and entertain. For a business, it affects how you recruit top employees, source your supply chain, manufacture and, of course, sell to customers,” he added.

For businesses to ensure they have the required scale to win in this environment, M&A is “transformational”, he said.

Corporate executives are also bullish on the sector, a survey by law firm Baker McKenzie shows. The survey of 800 senior executives in Asia Pacific shows over three quarters of the respondents predicting tech deals would increase markedly in the next 12 months.

DEAL DRIVERS

In the survey, conducted in the first quarter and published on Thursday, 92% said technology, media and telecoms companies would drive their own deal activity, while 57% said they would acquire new technology and associated expertise.

“This signals major consolidation across the tech sector, as fast growth companies snap up rival firms and complementary platforms, and move into new markets,” the report said.

In April, Grab Holdings, the largest ride-hailing and food delivery firm in Southeast Asia, went public in the world’s biggest $40 billion merger with a special purpose acquisition company.

GRAB AND GO

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 go-private plan for Japan’s Toshiba Corp. 

Toshiba has hired UBS to advise on a strategic review, 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.

  • Reporting by Reuters

 

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Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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