Japan led mergers and acquisitions activity in the first three quarters of the year, with domestic and outbound deal volumes hitting record highs.
Japanese M&A deals had a total value of $290.5 billion during the first three quarters of 2018, up 140 percent from the same period last year—the strongest first nine months since records began in 1980, according to data compiled by Thomson Reuters.
Among the deals, outbound investment by Japanese companies totaled $146 billion from 587 deals, another record high since the same period in 1980; U.S.-targeted deals accounted for more than a quarter of all outbound transactions, with a total value of $34 billion, Thomson Reuters data showed. Meanwhile, domestic Japanese deals reached the highest level since 2011, at $70 billion during the first three quarters.
The rest of the Asia Pacific region experienced an 8.5 percent year-on-year growth in M&A activity with 9,751 deals worth $759.7 billion during the three quarters ended Sept. 30. In addition to Japan, Australia also saw a rise in M&A deals. The country’s M&A activity totaled $120.4 billion during the first nine months, up 75 percent from the same period last year and the highest since 2011, according to Thomson Reuters data.
Australian law firms and firms with a significant Australian presence took top places in the legal adviser league tables for the Asia Pacific (excluding Japan) markets, thanks to the surge of deals. Allens took the top spot on Thomson Reuters’ rankings, which is based on deal volume; Freshfields Bruckhaus Deringer and Herbert Smith Freehills placed second and third, respectively. But according to similar rankings compiled by Bloomberg, the China-based global firm King & Wood Mallesons was the top M&A adviser, followed by Kirkland & Ellis and Herbert Smith Freehills; Allens placed fifth on Bloomberg’s list.
Due to different methodologies, deal roundup statistics often vary from organization to organization.
Allens is advising, alongside partner firm Linklaters, Hong Kong-based CK Infrastructure Holdings Ltd. and affiliated companies on a pending acquisition of Australian pipeline operator APA Group that values the target at $16 billion. The deal, which could be the second-largest ever takeover of an Australian company once closed, was also the largest deal involving an Asia Pacific-based target so far in 2018, according to Bloomberg.
Osaka-based Takeda Pharmaceutical Co. Ltd.’s $62 billion proposal to take over Irish drugmaker Shire Plc., the largest-ever overseas acquisition by a Japanese company, was also the top deal involving a Japanese company this year. Nishimura & Asahi, Takeda’s counsel on the deal, is the top M&A adviser of Japan-related deals on Bloomberg’s rankings; the Japanese firm is placed fourth on Thomson Reuters’ legal tables after Latham & Watkins; Fried, Frank, Harris, Shriver & Jacobson (counsel to Evercore Partners as Takeda’s financial adviser); and Nagashima Ohno & Tsunematsu. Morrison & Foerster, which has one of the strongest Japan practices among global firms, was bumped out of the top five from both organizations’ rankings. (Morrison & Foerster is not among the lead counsel on the Takeda deal.)
Among China-related deals, inbound investment targeting Chinese companies hit a four-year high this year with deals from the first nine months totaling $41.6 billion—up 30 percent from the same period last year. But outbound investment from Chinese companies continued to drop, falling to $93.5 billion—down 6.2 percent year-on-year according to Thomson Reuters.
Amid rising trade and political tension between China and the United States, Chinese companies’ interest in the U.S. continued to fall, according to a report by Mergermarket. The value of Chinese investment in the U.S. was a mere $2.6 billion—from fewer than 30 deals during the first nine months. Canada saw a notable uptick in Chinese investment, however. It was a key target for Chinese companies’ energy assets acquisitions, with eight deals worth $2.2 billion—more than five times the volume from the same period last year.