When Pfizer has $100bn to spend and even Warren Buffett is discussing $50bn deals, a pair of Asian bids totalling $2.5bn may look like mere crumbs for bankers stuck in the boondocks of the merger world. But the deals in question – a southeast Asian offer for Australia’s Goodman Fielder last week and a Chinese approach this week for Aquila Resources from the same country – suggest the stirrings of Asia’s own animal spirits.
Deal activity in Asia is already at an all-time record for this point in the year. Offers launched for local targets have totalled $262.4bn, according to Dealogic, surpassing 2007. That figure does not even include landmark outbound deals such as Japan’s Suntory spending $16bn on Jim Beam, the US whiskey maker.
But the total does count two deals that are not strictly M&A and which, if removed, would mean 2014 is not a record – yet. These are Citic Group’s reversal of $37bn of assets into Citic Pacific, its Hong Kong vehicle, and Temasek’s $5.7bn quarter-stake in Li Ka-shing’s Watsons retail chain. In other words, this boom still has its roots in the region’s traditions of uncontested part-stake deals and asset-shuffling among related, tightly controlled companies.