Asian Buyers Still Active in M&A Despite China Uncertainty

Cross-Border Deals are Increasingly Significant in Scope

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Asian buyers are increasingly aggressive in the M&A sector, and Dentsu and WPP were the most active of all the marketing communications groups in the first half of 2015.

According to Ciesco Market Intelligence, Asian groups accounted for four of the 11 most active companies in the first half of this year, with Dentsu and WPP tied for most acquisitions at 13 each. Another group, Research International, said Dentsu did 19 deals and WPP 15.

In addition to Japanese giant Dentsu and Korea's Yello Mobile, two Chinese companies are also in Ciesco's top 11: Alibaba and Keda Group, which deals mainly with infrastructure and real estate, but spent $481 million on Guangzhou Huayi display advertising in January 2015.

Company Country First Half Deals
Japan 13
UK 13
France 8
China 5
US 5
US 4
US 4
China 3
US 3
France 3
Korea 3
Credit: Ciesco Market Intelligence

Beijing-based BlueFocus, Korea's Cheil and Yello have also seen a lot of activity recently, although in more niche areas. There were 54 deals with Asian buyers in the first half of the year, according to Results International, but of those, only four have been outside the buyer's home country.

Julia Crawley-Boevey, a director at Results International, said that Chinese stock market fluctuations are impacting M&A activity, but not dramatically. She said, "It may slow down the emergence of new buyers, and some of the big groups have been holding off a bit due to the unrest, but those that have done a couple of deals already and got buy-in from shareholders are more confident."

Chris Sahota, founder and CEO of Ciesco, said, "There may be some short-term slowdown, but companies like BlueFocus have billions to spend and a lot of ambition – this won't stop them. China is forecast to grow at 6% for the next two to three years, which is three times the rate of the U.S. and U.K."

Asian companies do most M&A in Asia. BlueFocus ventured into North America with its Vision7 deal in Canada at the end of last year, and into the U.K. through a $30 million deal with We Are Social a year earlier. Cheil also moved into the U.K. with Iris in November 2014. And BlueFocus last year set up its international headquarters in San Francisco; the Chinese group's international president, Holly Zheng, is one of Ad Age's 2015 Women to Watch.

Julia Crawley-Boevey
Julia Crawley-Boevey

Ms. Crawley-Boevey said, "It's easier for Asian companies to make a splash in Europe because the size of investment required to get noticed isn't so big. They want to learn cultural behaviors and ways of doing business, and acquire management teams that will help them grow in the U.S. The U.K. in particular is almost a cultural hybrid and it's an easier first step."

After Verizon's $4.4 billion purchase of AOL, the biggest deal globally in the first half of 2015 was by China's Dalian Wanda Group, which spent $1.2 billion on Infront Sports & Media, a sports marketing company in Switzerland. Dalian Wanda operates in commercial properties, luxury hotels, and department stores, but also claims to be the world's largest cinema chain operator, and so has a foothold in the media and entertainment world.

Speaking about Dalian Wanda and Keda Group, Ms. Crawley-Boevey said, "Currently they are not really competing with the likes of WPP, but these groups are international, and marcoms are important to them – even if at the moment it is mostly to promote their main offering – so who knows what may happen in a year or two?"

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