"The study results underscore that U.S. companies continue their drive for expanding into new markets, products and services, and that emerging and high-growth market acquisitions are clearly a part of their strategy," said Mark Barnes, principal-in-charge of KPMG LLP's U.S.-High Growth Markets practice. "They are seizing opportunities to improve their supply chains and expand their customer base as the global economy moves from recession to recovery."
Emerging and high-growth market companies made 102 acquisitions in the second half of 2009, up from 78 during the first half of the year, according to the KPMG study, which tracks completed deals in which an acquirer took at least a 10 percent shareholding interest. China maintained its position as the top acquirer among emerging market countries with 30 acquisitions during the period.
"Overall, emerging market companies seem to be rebounding from the downturn more quickly than their developed counterparts," KPMG's Barnes said. "Their strength is evidenced by their renewed energy and confidence around pursuing acquisitions in developed economies."
Emerging Markets Bounce Back
While the KPMG study found that developed-to-emerging (D2E) deals declined overall in the second half of 2009 - down to 216 versus 259 registered in the previous six-month period - emerging-to-developed (E2D) deals increased.
China (30) was the leading emerging market acquirer of companies in developed economies in the second half of 2009, followed by the Middle East (17), India (13), Russia and Commonwealth of Independent States (CIS) (13), and Korea (12).
"In the emerging and high-growth markets, the study suggests that Chinese companies have weathered the recent economic crisis well and have the cash on hand to hit the acquisition trail the hardest," said KPMG's Barnes. "We saw a particular focus on commodity and natural resource acquisitions in the second half of 2009, reflecting China's need to satisfy its growing domestic energy demand."
After the United States and Australia (16 each), the most popular targets for E2D deals in the second half of 2009 included the United Kingdom (15), Canada (12), and Germany (10), according to the KPMG study.
In the first half of 2009, the top high-growth market acquirers of companies in developed economies were China (20), Central and Eastern Europe (13), India (12), Russia and CIS (11), and South Africa (10), according to the KPMG study.
U.S. Companies Hone in on India
As reported by the KPMG study, Indian companies were the leading emerging and high-growth market targets for U.S. companies. In addition to India (19), U.S.-based companies made the majority of their high-growth market acquisitions in Central and Eastern Europe (12), China (10), Korea (8), and Brazil (7) in the second half of 2009.
Dan Tiemann, U.S. lead partner for the Transaction and Restructuring Services group at KPMG LLP, said the survey findings are consistent with what he is seeing in the United States. "Companies with strong balance sheets are beginning to dip their toes back into the M&A pool now that the free-fall has stopped and there's more stability in the market. Savvy investors are finding there are some very attractive deals, which should drive increased deal volume throughout the year."
In the first half of 2009, the top emerging and high-growth market targets for U.S. companies were located in China (19), Brazil (13), India (13), and Central and Eastern Europe (11), according to the KPMG study.
For D2E deals globally in the second half of 2009, Central and Eastern European companies were the most targeted, with 47 total acquisitions. Other popular targets overall for D2E deals included China (40), India (38), Korea (26), and Brazil (20), the KPMG study indicates.
"Brazil has faired well during the economic downturn and is still an important market for investment," added Barnes. "Going forward, the country's natural resources will continue to be an attractive asset."
