Asia-Pacific firms well placed for M&A deals
Positive earnings forecasts and strong debt capacity has left Asia-Pacific companies well placed to engage in strategic mergers and acquisitions over the next 12 months, according to KPMG.
The forecast was made in the inaugural edition of KPMG’s Global M&A Predictor report, launched today by Julian Vella, national managing partner — Australian corporate finance.
It is based on the Predictor’s analysis of KPMG’s Global 1,000 (forward-looking) index of 1,000 leading global companies’ net debt to earnings before interest, taxes, depreciation, and amortisation ratios and price to earnings (PE) ratios.
Vella said the index reveals a “window of opportunity exists in the next year for some of the world’s leading companies to execute strategic deals”.
Asia-Pacific companies in the healthcare, utilities, telecommunications and basic materials sectors are “likely to be the aggressors” in the global M&A market in next six months, he said.
“In turn, Asia-Pacific technology companies are likely to be targets for acquisition.”
Vella said greater M&A deal volumes and values in the region “could be fuelled by a number of key prevailing factors”.
“Cashed-up private-equity firms in the Asia-Pacific were especially hungry for deals, although most corporates were relatively conservatively financed.
However, while these corporates are returning capital to shareholders rather than making high-price acquisitions, positive earnings forecasts and strong debt capacity still left them with attractive opportunities to pursue deals, he said
He added that “very high liquidity in the debt market and competitive debt-pricing also showed that lenders were keen to lend”.
“Furthermore, the global macro-economic environment is positive, with major money markets benefiting from relative political stability.”
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