Magic Circle Trio Lead on Q1 Asia Pacific M&A as Deal Values Plummet Amid COVID-19 Pandemic

The coronavirus pandemic drove Asia Pacific M&A activity in the first three months of 2020 to its lowest levels since 2013, and Allen & Overy, Freshfields Bruckhaus Deringer and Linklaters led the pack of international legal advisers on those deals.

According to data compiled by Bloomberg, M&A deals with Asia Pacific-based targets in the first quarter of the year totaled $178.2 billion, down 4.2% year-on-year. And deals worth $1 billion or more decreased by 6.1% to 31 deals in the region.

Mergermarket counted 616 M&A deals in the Asia Pacific region, excluding Japan, in the first quarter, generating $103.2 billion in total deal value, a decline of 32% from a year earlier. This also marked the lowest quarter in terms of deal value since the first quarter in 2013.

The coronavirus outbreak that originated in China and later spread across Asia is canceling out the momentum regained late last year when China and the United States agreed to an initial trade agreement, the Mergermarket report said.

“Hopes of a quick recovery in the Asia Pacific seem to fade as the pandemic spread to other major economies across the world,” the report stated, adding that China and Hong Kong, the largest contributors to M&A activity in Asia and the first area to be hit by the pandemic, have seen deal value plunge 35.8% to $51.3 billion in the first quarter.

Tesco Plc.’s $10.6 billion sale of its Thailand and Malaysia business was the largest M&A transaction in the Asia Pacific announced so far this year. The deal helped put three Magic Circle firms in the top five Asia Pacific legal advisers, according to rankings by both Bloomberg and Mergermarket. Allen & Overy and Freshfields are representing Tesco as the retail giant sold its Thai and Malaysian divisions to Thailand’s Charoen Pokphand Group, which was advised by Linklaters.

Japan is the only market in Asia that has seen year-on-year growth in first-quarter M&A activity. The country saw $13 billion worth of deals in the first three months of this year, up 62.7% from a year earlier and the highest first quarter since 2016, according to Mergermarket data. The largest deal announced was Hitachi Ltd.’s $4.9 billion offer to buy the remaining 48% of its semiconductor manufacturing equipment maker arm, Hitachi High-Tech Corp.

The coronavirus will likely have more of an impact on the Japanese market. Last week, Japan and the International Olympic Committee agreed to postpone this summer’s Tokyo Olympics to 2021. “[The postponement] is likely to cast a shadow on the country’s economic forecast since billions of yen have already been spent by the government and sponsors,” the Mergermarket report said.

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