The semi-annual KPMG study, which tracks completed deals in which an acquirer took at least a 5 percent shareholding interest, found that emerging and high-growth market companies completed 42 acquisitions in the United States in the second half of 2012, slightly down from the 50 deals completed in the first half of 2012.
China (12), and South and East Asia (6) accounted for the majority of acquisitions made in the United States in the second half of 2012.
“Emerging and high-growth market companies are continuing to diversify their portfolios outside their home market and the United States remains attractive for a number of reasons including market size, talent, and resources,” said Mark Barnes, national leader of KPMG’s U.S. High Growth Markets practice.
Overall, emerging and high-growth market companies made 216 acquisitions in developed economies in the second half of 2012, down from 227 during the first half of 2012, but very much in line with the volume of deals consistently achieved during the past two years, according to the KPMG study.
China (40) and India (29) were the top acquirers in H2D deals in the second half of 2012.
“The United States is a sound investment destination for companies based in emerging markets looking to expand their geographic reach, and, as a result, many of these companies are actively pursuing transactions in the United States that align with their growth strategies,” said Dan Tiemann, KPMG’s Americas lead for Transactions & Restructuring. “On the outbound side, we’re seeing U.S. companies flush with cash looking to emerging markets for growth opportunities.”
United States Top Acquirer of Emerging and High-Growth Market Companies
U.S.-based companies completed 102 emerging and high-growth market acquisitions in the second half of 2012, down from 111 in the first half of 2012.
This drop in acquisitions made by U.S. companies mirrors a slowdown in developed-to-high-growth market (D2H) deals, which dropped 12 percent -- 619 in the second half of 2012 versus 707 in the first half of 2012. Japanese companies made the second-most acquisitions of emerging market companies with 73 in the second half of 2012.
“Developed markets are showing more stable levels of confidence domestically, but this is not translating into higher acquisition activity in emerging markets,” said Barnes. “D2H deal volumes fell to 2009 levels, but there were some bright spots like Japan, perhaps a sign the country is bouncing back after the trauma of the 2011 tsunami and the global downturn.”
The most popular geographic targets for U.S. companies in the second half of 2012 were Brazil (23), South American countries excluding Brazil (14), and South and East Asia (14). South and East Asia (109) and China (80) were the most popular targets for D2H deals overall.
H2H Deals Continue to Drop
In the second half of 2012, there were 100 total high-growth-to-high-growth (H2H) deals, down from 125 in the first half of 2012. Russia was the most popular regional target, registering 30 inbound deals, according to the KPMG study. Central and Eastern Europe and the Commonwealth of Independent States were the leading emerging market acquirers in other emerging markets with 17 deals each.
About KPMG’s High Growth Markets International Acquisition Tracker Study
The study analyzed deal flows between 15 “developed” economies or groups of economies and 13 “emerging” and “high-growth” economies or groups of economies. Established in 2003, the study includes data from “completed” transactions where a trade buyer has taken a minimum 5 percent shareholding interest in an overseas company. The study is produced every six months to give an up-to-date overview of cross-border M&A activity, with the current edition featuring deals between August and December 2012. All raw data within the study is sourced from Thomson Reuters SDC and excludes deals backed by government, private equity firms or other financial institutions.
About KPMG LLP’s U.S. High Growth Markets practice
KPMG’s High Growth Markets practice helps companies navigate the complex challenges and risks associated with inbound and outbound investment and capitalize on growth opportunities. The practice provides audit, tax and advisory services to U.S.-based companies in their pursuit of outbound investment opportunities in high-growth markets such as China, India, Korea, Brazil, Russia, Mexico, ASEAN, Africa and beyond, and high-growth market-based companies with inbound investment interest in the United States.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
Contact: Ichiro Kawasaki