Tim Payne Senior Partner, Head of Asia Brunswick Group. Striking Patterns and Trends Impacting Global M&A

Transcription

1 Tim Payne Senior Partner, Head of Asia Brunswick Group Striking Patterns and Trends Impacting Global M&A

2 Financial 1 The convergence of business, society & politics has created a more complex environment than ever for deal makers Social Political BRUNSWICK GROUP

3 Fragmented societies Source: Perspectives Research, General Public in 26 markets BRUNSWICK

4 M&A advisors see increased complexity Greatest negative impact factors on cross-border deals (next 12 months) Limitations on outbound investment (e.g. in China) Geopolitical risk (e.g. Brexit, North Korea sanctions, German federal election) 52% 51% Trump & CFIUS in the US 44% Delayed closing approval (e.g. extended regulatory deadlines) Populism & nationalism in the West Increased anti-trust regulation globally Emergence of CFIUS-type bodies in other markets (e.g. Germany) 24% 24% 22% 22% BRUNSWICK

5 2 Cross border M&A is challenging the notion that globalisation is dead BRUNSWICK

6 Globalisation in Crisis? BRUNSWICK

7 Majority of advisors expect cross-border M&A to increase Future prospects for M&A (next 12 months) Overall number of crossborder deals 58% 31% 11% Overall number of deals 51% 38% 11% Value of deals 39% 46% 16% Number of 'mega deals' 30% 42% 27% Increase Stay the same Decrease BRUNSWICK

8 Cross-border M&A rises as trade barriers increase Source: Thomson Reuters, WTO: PwC analysis BRUNSWICK

9 Views of globalisation: West vs. The Rest Net Support for Globalization 80% 60% 40% 20% 0% -20% BELGIUM FRANCE ITALY SWITZERLAND AUSTRIA SPAIN AUSTRALIA UK NETHERLANDS USA GERMANY POLAND SWEDEN Net Support Globalization Net Oppose Globalization FINALND DENMARK JAPAN HONG KONG MEXICO SOUTH AFRICA THAILAND INDONESIA SINGAPORE UAE BRAZIL CHINA INDIA Source: Perspectives Research, General Public in 26 markets BRUNSWICK

10 From this day forward, it's going to be only America first We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Donald Trump at 2017 Presidential Inauguration BRUNSWICK

11 We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism. - Xi Jinping at Davos, 2017 BRUNSWICK

12 3 Technology will drive cross-border M&A in spite of growing concerns & regulatory barriers BRUNSWICK

13 Tech M&A to lead the way Most active sectors for cross-border M&A (next 12 months) Technology & Internet Industrials & Transportation Consumer (e.g. retail, food and beverage) Healthcare services & providers Pharma / biotech Energy Financials Telecom & Media Materials (e.g. mining, refining, chemical) Utilities Others 18% 18% 11% 5% 2% 31% 30% 42% 42% 42% 56% BRUNSWICK

14 Developed tech areas prime for M&A Most active M&A areas within tech (next 12 months) Artificial intelligence / Machine learning Internet of things / Intelligent enterprise Automation / Robotics Driverless cars Blockchain Virtual reality / Augmented reality 3D printing Quantum computing Others Don't know 27% 20% 14% 12% 6% 6% 2% 68% 67% 51% Next wave of tech M&A? BRUNSWICK

15 4 China expected to lead global cross-border M&A in year ahead in spite of curbs on capital outflows BRUNSWICK

16 One Belt One Road to drive global M&A in year ahead Greatest positive impact factors on cross-border deals (next 12 months) Overall Asia Europe US Low cost of funding/ 'cheap debt' financing 67% 42% 81% 75% Excess cash on balance sheet 58% 42% 75% 54% Low GDP growth in developed markets prompting acquisitions abroad 33% 42% 28% 38% China's Belt & Road initiative 31% 68% 25% 4% Shareholder activism 27% 11% 33% 25% Tax policy 24% 11% 14% 50% Geopolitical risk prompting international diversification 20% 42% 14% 17% BRUNSWICK

17 China to lead global M&A in year ahead, level with US Most active country or region in buying overseas assets (next 12 months) Most active country or region in selling assets (next 12 months) China 37% Europe (excl. U.K.) 48% United States 36% United States 26% Europe (excl. U.K.) 19% U.K. 13% Asia (excl. China & India) 5% Asia (excl. China & India) 4% BRUNSWICK

18 5 Low awareness & negative perceptions about China Inc. create a significant barrier for Chinese acquirers BRUNSWICK

19 Low awareness of Chinese corporates % very aware / quite aware US UK Germany Samsung 58% 72% 75% Sony 56% 72% 73% Alibaba 21% 37% 49% Sinopec 4% 28% 29% Baidu 7% 25% 28% CITIC 5% 27% 27% Tencent 2% 26% 28% Ant Financial 4% 24% 25% Didi Chuxing 3% 22% 25% Source: Brunswick survey of Opinion Elites in US, UK & Germany BRUNSWICK

20 Perceptions of China Inc. consistently lower than perceptions of companies from other countries Net positive opinion of business from this country 70% 60% 50% 40% 30% 20% 10% Net negative opinion of business from this country 0% -10% -20% IMEA LATAM APAC EUROPE USA Source: Perspectives Research, General Public in 26 markets BRUNSWICK

21 Europe, US and other developed markets pose higher risk of public backlash to inbound Chinese deals BRAZIL UAE Positive INDONESIA opinion 30% THAILAND of Chinese business FINLAND SINGAPORE INDIA NETHERLANDS 10% SOUTH AFRICA UK MEXICO AUSTRALIA SWEDEN -35% -15% DENMARK 5% 25% 45% 65% -10% POLAND SPAIN BELGIUM USA ITALY Negative opinion of Chinese business FRANCE AUSTRIA SWITZERLAND GERMANY JAPAN 50% -30% -50% -70% Developed HONG KONG Emerging Oppose foreign acquisitions Support foreign acquisitions Source: Perspectives Research, General Public in 26 markets

22 Lack of trust impacts on regulatory approval Impact of China s image & reputation on Chinese corporates overseas deals Ability to get regulatory approval 39% 48% 87% NET negative Ability to get board and shareholder approval 10% 67% 77% NET negative Ease of post-merger integration 14% 52% 66% NET negative Significant negative impact Somewhat negative impact No impact Somewhat positive impact Significant positive impact BRUNSWICK

23 Lack of trust impacts on shareholder approval Impact of China s image & reputation on Chinese corporates overseas deals Ability to get regulatory approval 39% 48% 87% NET negative Ability to get board and shareholder approval 10% 67% 77% NET negative Ease of post-merger integration 14% 52% 66% NET negative Significant negative impact Somewhat negative impact No impact Somewhat positive impact Significant positive impact BRUNSWICK

24 Lack of trust impacts on ease of post-merger integration Impact of China s image & reputation on Chinese corporates overseas deals Ability to get regulatory approval 39% 48% 87% NET negative Ability to get board and shareholder approval 10% 67% 77% NET negative Ease of post-merger integration 14% 52% 66% NET negative Significant negative impact Somewhat negative impact No impact Somewhat positive impact Significant positive impact BRUNSWICK

25 6 A good public reputation helps lower deal costs & chances of success for an acquirer BRUNSWICK

26 Reputation matters Aspects of reputation with greatest impact to a deal Position in own sector 61% Recent crisis Governance Country where the company is headquartered 48% 47% 53% Recent litigation Cyber security policy / risks Workplace environment / employee engagement Social responsibility stance and position 29% 22% 19% 13% Others 7% BRUNSWICK

27 Reputation matters for target company Deal making aspects impacted by target company s public reputation 97% NET impact Offer price 48% 49% 3% Ability to get board and shareholder approval 44% 52% 5% Ability to get regulatory approval 33% 42% 25% Significant impact Some impact No impact BRUNSWICK

28 Reputation matters for target company Deal making aspects impacted by target company s public reputation 97% NET impact Offer price 48% 49% 3% 95% NET impact Ability to get board and shareholder approval 44% 52% 5% Ability to get regulatory approval 33% 42% 25% Significant impact Some impact No impact BRUNSWICK

29 Reputation matters for target company Deal making aspects impacted by target company s public reputation 97% NET impact Offer price 48% 49% 3% 95% NET impact Ability to get board and shareholder approval 44% 52% 5% 75% NET impact Ability to get regulatory approval 33% 42% 25% Significant impact Some impact No impact BRUNSWICK

30 Reputation also matters for acquirer Ability to get board and shareholder approval Deal making aspects impacted by acquirer s public reputation 56% 98% NET impact 41% 2% Ability to get regulatory approval 53% 40% 7% Ease of post-merger integration 28% 45% 27% Offer price 24% 51% 26% Significant impact Some impact No impact BRUNSWICK

31 Reputation also matters for acquirer Ability to get board and shareholder approval Deal making aspects impacted by acquirer s public reputation 56% 98% NET impact 41% 2% 93% NET impact Ability to get regulatory approval 53% 40% 7% Ease of post-merger integration 28% 45% 27% Offer price 24% 51% 26% Significant impact Some impact No impact BRUNSWICK

32 Reputation also matters for acquirer Deal making aspects impacted by acquirer s public reputation 98% NET impact Ability to get board and shareholder approval 56% 41% 2% 93% NET impact Ability to get regulatory approval 53% 40% 7% 73% NET impact Ease of post-merger integration 28% 45% 27% Offer price 24% 51% 26% Significant impact Some impact No impact BRUNSWICK

33 Reputation also matters for acquirer Deal making aspects impacted by acquirer s public reputation 98% NET impact Ability to get board and shareholder approval 56% 41% 2% 93% NET impact Ability to get regulatory approval 53% 40% 7% 73% NET impact Ease of post-merger integration 28% 45% 27% 76% NET impact Offer price 24% 51% 26% Significant impact Some impact No impact BRUNSWICK