Overview of cross-border mergers and acquisitions in asean countries from 2010 to 2021

Nội dung text: Overview of cross-border mergers and acquisitions in asean countries from 2010 to 2021

1. OVERVIEW OF CROSS-BORDER MERGERS AND ACQUISITIONS IN ASEAN COUNTRIES FROM 2010 TO 2021 MA. Le Thi Bich Ngoc1 Abstract: Cross-border Mergers and Acquisitions (CBM&As) is indicated as one of the primary forms of Foreign Direct Investment (FDI) and regarded as a phenomenon of external development strategies from multinational corporations. However, World Investment Report 2020 (UNCTAD, 2020) reports a dramatic decrease of 40% in global FDI for the year 2020. In addition, FDI is forecasted to decline by a further 5 to 10% in 2021 due to the COVID-19 crisis. Nevertheless, the FDI inflow of ASEAN members countries increased by 5% to a record level of $156 billion, which was driven by strong investment mainly in Singapore, Indonesia and Vietnam by receiving more than 80% of inflows (UNCTAD, 2021). To analyze CBM&As in ASEAN member countries, this paper reviews Cross-border Mergers and Acquisitions Trends in ASEAN countries from 2020 to 2021. Keyword: FDI, cross-border M&A, ASEAN countries. Vietnam INTRODUCTION Foreign Direct Investment (FDI) plays a vital role in boosting economic growth by integrating the economy to the global market by transferring new technology and innovation and developing human resources (Park, Hyung-Suk Byun, Hyun-Hoon Lee, and Cyn-Young, 2012). As implied by Stepanok (2012), FDI consists of Greenfield FDI and cross-border M&A. In recent years, the rapid growth of cross-border mergers and acquisitions (M&A) has accelerated the globalization of the industry and reshaped the international industrial structure. According to World Investment Report 2020 (UNCTAD, 2020), there is a dramatic decrease of 40% in global FDI for the year 2020. In addition, FDI is forecasted to decline by a further 5 to 10% in 2021 due to the COVID-19 crisis. The main factor that will determine the severity of the decline in the development of health emergencies. Another critical element of uncertainty will be the degree of economic loss and the effectiveness of the extraordinary measures implemented by governments worldwide to support businesses and households. Specific trade and investment policies in response to the crisis will also seriously affect investor confidence and investment decisions (UNCTAD 2021). FDI inflow of ASEAN member countries increased by 5% to a record level of $156 billion, driven by strong investment mainly in Singapore, Indonesia, and Vietnam by receiving more than 80% of inflows (UNCTAD, 2020). As reported by ASEAN (2021), according to UNESCAP (2020), ASEAN countries pursue national policies to create an enviable environment for FDI by introducing investment liberalization measures in 2019 and 2020. On the other hand, Vietnam imposed new restrictive measures related to foreign currencies and foreign indirect 1 VNU University of Economics and Business; Email: ngocltb@vnu.edu.vn 190
2. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 191 capital accounts in the subregion. In addition, Vietnam revised the FDI restriction to redefine foreign investors and outline entry requirements, which will affect 2021. Vietnam additionally imposed a new decree to increase the list of foreign and domestic SMEs eligible for investment incentives in the Covid-19 pandemic. 1. LITERATURE REVIEW 1.1. The definition of Cross-Border Mergers and Acquisitions According to Sejdinaj et al. (2016), Foreign Direct Investments (FDI) comprised of two forms, which are known as Greenfield Investment and Brownfield investment (Cross-border Mergers and Acquisition), by which mergers and acquisition are indicated as a mainstream economic activity as well as economic investment phenomenon (Hoang Vuong et al., 2009). In addition, brownfield FDI indicates that the corporations used existing firms instead of creating a new one as a tool to compete more effectively on the macro-level. As a consequence, firms can expand their market in foreign countries. Furthermore, when a local firm’s assets and activities are transferred to a foreign corporation (the former becoming an associate of the latter), this is a cross-border purchase (Calderún, Cộsar et al. 2004). As discussed by Sejfinah et al. (2016), Cross-border M&A investment become more attractive than greenfield FDI based on the data analysis from UNCTAD. 1.2. Motivations for Cross-Border Mergers and Acquisitions 1.2.1. Firm-Specific factors Many studies examined the factors of businesses or nations that were highly involved in CBM&As. For example, according to Popli & Sinha (2014), larger businesses are more likely to bid in Cross-border M&As than smaller firms because a big corporation typically has a substantial market position. Additionally, higher profitable corporations tend to become bidders in CBM&As. Rahim, N, M & Ali, R (2016) indicates that the efficiency of avoiding competition via Cross-border Mergers and Acquisition should emerge in firms’ performance in Research and Development industry with high asset intangibility. Consequently, AMQ da Cunha (2018) indicates that shareholders of R&D intensive businesses generated high abnormal returns. On the other hand, Since the option to engage in CBM&As is within their discretion, the top management team or executive board of a firm played a critical part in explaining the variation in firm performance during CBM&As. According to agency theory, if shareholders’ and managers’ motivations are aligned, the firm may not face agency costs such as unprofitable CBM&As. Furthermore, without an active board (based on the number of chairmanships) would enhance profitability since agents’ directors can prevent executives from developing empires, mainly through CBM&As, owing to the limited consultancies (Mat Rahim & Ruhani, 2016). Since appropriate information is tough to obtain in a region with political instability, Kim and Lu (2013) implied that identifying a prime operating objective is crucial for obtaining efficiencies during CBM&As. Furthermore, Lebedev et al. (2015) and Deng and Yang (2015) both agreed that international experience is beneficial in increasing the likelihood of becoming engaged in CBM&As.
3. 192 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI 1.2.2. Country-specific factors The attributes of the economy had a significant impact on the frequency of CBM&As. Economic growth is the most intensively reported country-specific source. Investigations have shown that the economic growth of the target country is critical in attracting foreign bids, which was owing to buyers’ willingness to take a more hazardous method of an entrance (CBM&As rather than joint venture) to increase purchasing power (Deng & Yang, 2015). On the other hand, Hur et al. (2011) claimed that the economic growth of the bidding nation was more crucial for CBM&As than the economic development of the target country. Jongwanich et al. (2013) look into the influence of the national bidding economy on CBM&As by implying that the volume of CBM&As by enterprises from the bidding nation increased as the share market of the competing country expanded, as the firms had profitability. Deng and Yang (2015) also discovered that when the native country’s financial market size is significant, emerging economies firms tend to do CBM&As. In addition, reasonable corporate governance regulations in target nations received higher CBM&As inflow, according to Lebedev et al. (2015). Moreover, the devaluation of the target currency relative to the bidder is another crucial country-specific antecedent of CBM&As transactions since it reduces the cost of capital transfer (Jongwanich et al., 2013). 1.3. Impacts of Cross-Border Mergers and Acquisitions 1.3.1. Firm’s performance 1.3.1.1. Market profitability Numerous researches on the impact of CBM&As on the corporate strategy employed event study methods to determine profitability was generated by shareholders. Several analyses look at both bidder and target firm earnings. Target shareholders in CBMAs earned for all event windows analyzed in the research, according to Zhu & Jog (2012), which are identical to domestic M&A. Furthermore, target stockholders earn regardless of the target country’s degree of development because this is an emerging market. As a result, there is strong evidence that target shareholders gained from CBM&As. 1.3.1.2. Non- market profitability Apart from technical analysis, several pieces of research evaluated the impact of CBM&As transactions on company performance. Klimek (2015) utilized sales revenue, gross profit, and return on equity (ROE) to evaluate post- CBM&As bidders’ performance and found a decrease in business performance following CBM&As. After the CBM&As deal, bidders’ sales income and gross profit improved. Song et al. (2010) measured business strategy utilizing excess free cash flow per share (EFCFS) and concluded that EFCFS increased after CBM&As. Consequently, applying non-market return as a proxy for company success did not yield compelling proof of firm performance after CBMA transactions. 1.3.2. Factors of firm performance in Cross-border M&A Many researchers reviewed extended investigations to explain the rationale of company performance after CBM&As announcements in order to evaluate firm performance after CBM&As announcements. Firm-specific variables, deal-specific factors, and country-specific variables were among the most commonly cited drivers.
4. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 193 1.3.2.1. Firm-Specific factors Several analyses suggest that the capital structure impacts shareholder value generation during cross-border mergers and acquisitions. Boateng (2015), on the other hand, revealed a linkage for both scale and aggregate anomalous return of investors. In addition, various researchers focus on the influence of different forms of control on company profits. On the other hand, specific investigations have indicated that government entity ownership has a favourable influence on purchasers’ gain (Du & Boateng, 2015; Lebedev et al., 2015). A further form of investment that has attracted much attention is foreign capital. According to Lebedev et al. (2015), international trade led to improved post-acquisition productivity. This finding confirmed the facilitation theory, which claims that foreign institution investors assistance in decreasing expenses and imbalance of data during CBM&As transactions. Finally, the paper found that CBM&As will assist the transition of recently quoted companies and, consequently, enhance the targeting company’s performance. Based on organizational learning theory and dynamic capabilities theory, a business with a strong tradition should have a strong adaptation ability, especially when it comes to CBM&As transformation since it has gone through many transformations. Based on organizational learning theory and dynamic capabilities theory, a business with a strong tradition should have a strong adaptation ability, especially when it comes to CBM&As transformation since it has gone through many transformations. Ahmad et al. (2013) indicated a strong connection between company age and bidding yield, confirming the organizational learning theory thesis. According to Du and Boateng (2015), a profitable business harms bidders’ returns because the manager might invest in value-decreasing CBMAs. As Aybar and Thanakijsombat (2015) discussed, purchasing firms with poor market impact generates better returns during CBM&A than earnings announcements with greater growth possibilities. They argued that a CBM&As proposal by an enterprise with a limited income source was less probable to happen. As a result, the market reacted favourably to the businesses’ surprise announcement of CBM&As. 1.3.2.2. Deal characteristic factors The form of purchase used during the transaction impacted investors’ returns. According to Du and Boateng (2015), cash payment has a beneficial influence on buyer yield. However, rather than relying solely on payment mechanisms, Aybar and Thanakijsombat (2015) examined the nature of CBM&As financing. Under the management system of debtors, they indicated a substantially higher yield for bidders that leveraged debt financing CBM&As transactions than domestically financed acquisitions. Since CBM&As merge multiple businesses from different nations and cultures, it is critical to have significant shares in the target firm. As a result, having enough command in the objective would accelerate the post- CBM&As project implementation. For example, Yang (2015) found that more considerable bidder gains were associated with increased control post-purchase. Nevertheless, as Rani et al. (2014) mentioned, partly or wholly post-acquisition ownership is insufficient to build profits because there existed knowledge imbalance and behavioural obstacles between the targeted and bidders in CBM&As. As a result, ownership of the acquiring company was a requirement for the post-acquisition integration process.
5. 194 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI 1.3.2.3. Country-Specific factors Post-CBMA integration is critical to effective CBM&As, resulting in increasing shareholders’ wealth. On the other hand, Aybar and Thanakijsombat (2015) argue that gaining an objective with a significant cultural gap is beneficial since it increases bidders’ opportunity to comprehend from differences and broaden their knowledge base. Du and Boateng (2015) revealed a similar impact of exchange rate volatility liberalization on bidder’s profit in their study of CBM&As value generation. They claimed that the beneficial impact was due to the decrease in paperwork due to the liberalization of the monetary policy registration, which reduced CBM&As expenses. Finally, Aybar and Thanakijsombat (2015) explored the influence of the nation hazard ratio on bidder profit from a different perspective. When they entered a higher risk target nation, they reported a more significant bidder return since the manufacturers expected to counterbalance the growth into more significant risk markets. 1.4. Macro-environment analysis of Cross-border M&A 1.4.1. The concept of risk According to the research on the risk concept, a risk is a possible danger that can happen or not. Risk is defined by Kungwani (2014) as “the possibility of incurring a loss measured against the possibility of gaining something of valuation.” On the other hand, risks may also be defined as future unpredictable events. Changes to business forms can result in a reorganization of a new institution’s entire plan, as M&A includes cooperation among multiple firms. Merger and acquisition can take several forms, according to Chen & Wang (2014): 1) when both firms are incorporated with one other, and 2) when firms strive to maintain their autonomy independence. Businesses may impact the nature of their engagement in the first scenario – superior or subordinated. There is a danger that a subsidiary firm would lose its distinctiveness and creativeness due to obeying the instructions of the holding firms, which interested the superior in the first place and became one of the significant reasons for M & M&A. 1.4.2. Political risk On a national basis, there are numerous sorts of threats, according to ICRG, but the institution is primarily based on specific: financial, economic, and political risks. Enterprises intending to enter the world economy go through many phases of incorporation, and it is critical to decide if the enterprise needs to associate with brownfield FDI - mergers or acquisitions of other enterprises in the host nation. As a consequence of this approach, the organization may face several challenges, some of which may be social issues. Furthermore, political risks are seen as one of the most significant openness to international firms operating overseas posed by the authorities, regulations, or structures (Umidjon et al., 2014). 1.4.3. Financial risks According to the ICRG, financial barriers may be measured on a macro-level by the magnitude of a country’s debt concerning GDP. This indicator depicts the country’s economic stability and is a metric of the nation’s inability to satisfy its debt via products and services. Even though the vast majority of countries strive for foreign debt stability, a high index of Total Foreign Debt as a percentage of GDP does not rule out the possibility of economic
6. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 195 development in the host country (Herndon et al., 2014). Given this, even in the face of absolute financial instability, the country can see economic development. Financial risks are firm to all of the nation’s monetary operations. Top managers should always anticipate the likelihood of financial challenges, particularly in the context of entrepreneurship. Firms frequently encounter financial challenges, whether dealing with the country’s money, it operates or an international currency. Organizations often encounter financial difficulties or even restrictions to their commercial operations because they must cope with currencies of the nation and region or some foreign currency. As a result, significant exchange rate volatility closely linked to the financial transactions of international corporations. 1.4.4. Cultural risks Cultural threats are another sort of risk that has a significant impact on the business performance of companies intending to connect globally. Cultural risks can be a constraint in M&A due to variations in management and leadership systems. The failure of Daimler- collaboration Chrysler’s is a good illustration of cultural constraints in mergers and acquisitions (Sejdinaj, A, Y et al. 2016). Executives in the United States and Germany have distinct perspectives on accomplishment, performance, and training methods. If both firms are equal, they will “pull the blanket” in opposing directions without making any concessions. The process of adjusting and changing the organizational structure can be time-consuming and costly. In addition, variations in shopping patterns constitute a cultural risk, as there is no assurance that popular items in one nation would be successful in another. 2. OVERVIEW OF ASEAN CROSS-BORDER MERGERS AND ACQUISITIONS ACTIVITIES IN TERMS OF TARGET AND BIDDING FIRMS 2.1. Overview of Top 6 ASEAN Cross-border Merger and Acquisition analysis in terms of target and bidding firms Figure 1: Top 6 ASEAN countries cross-border M&A activities from 2010 to 2020 Sources: Reproduced from UNCTAD 2021 Database Figure 1 illustrated an enhancement in Cross-border M&A activities among the Top 6 ASEAN countries, which are Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam, between 2010 and 2020. The bar chart illustrates the number of ASEAN cross-border
7. 196 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI M&A transactions, whereas the line graph indicates the value of CBM&As transactions. It is evident from the bar that both the value and volume of CBM&As tends to fluctuate during the period. Figure 2: Proportions of ASEAN Cross-border M&A activities transactions between 2010 and 2020 Sources: Reproduced from UNCTAD 2021 Database The above pie chart indicates the percentages of cross-border M&A transactions from Top 6 ASEAN countries from 2010 to 2020. For this data set, the chart is divided into six countries: Indonesia, Malaysia, the Philippines, and Singapore. Thailand and Vietnam. What stands out is that Singapore and Malaysia lead the way in terms of accounting for the highest proportion of cross-border M&A transactions, with 45.3% and 17.6%, respectively. Moreover, Vietnam, Indonesia and Thailand have approximated the exact percentages of CBMA transactions in the top 6 ASEAN countries. Figure 3: The volume of Top 6 ASEAN Cross-border M&A activities from 2010 to 2020 Source: Reproduced from UNCTAD 2021 Database
8. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 197 The bar chart illustrates the number of cross-border mergers and acquisitions by the top 6 ASEAN members between 2010 and 2020. It also indicates whether they were target firms or bidding Firms. We can see from the data that there was a fluctuation in transactions on both sides over the period. However, compared to the number of CBM&As’s transactions from selling firms, the number of bidding firms was significantly smaller. Furthermore, the number of ASEAN target firms’ transactions eventually overtook deals from the bidder side, reaching a high of more than 300 deals in 2011. The year 2010 saw the most dramatic developments; the number of purchasing transactions increased significantly, whereas and the number of bidding deals decreased significantly in 2011. There was also a significant decline in the number of transactions from target firms from 2011-2013. Firgue 4 below shows the value of cross-border M&A transactions of ASEAN countries from 2010 to 2020. It measures CBM&As transactions in a million USD. According to the information, the value of both forms of transactions formed a similar pattern. However, there was always a higher value of buying transactions than target firms from 2010-2019. On the other hand, the value of purchasing deals went up dramatically, whereas there was a significant drop in selling transactions. Over ten years, the evaluation of CBM&As’ transactions continued to decrease, although there was some fluctuation in this trend. The value of transactions from the bidding side and target firms reached a peak in 2015 and 2018, respectively, before going down sharply in 2019. Figure 4: The value of Top 6 ASEAN countries Cross-border M&A activities from 2010 to 2020 Source: Reproduced from UNCTAD 2021 Database Figure 5 indicates the number of cross-border mergers and acquisitions in the top 6 ASEAN countries from 2010 to 2020. The historical trends imply Singapore is the most occupied country with the most significant volume of CBM&As activities throughout the period. On the other hand, Indonesia reached the highest volume in 2011. After that, there were significant drops in numbers between 2011 and 2015. Since 2016, there has been an improvement in numbers of Indonesia, although the trend showed a fluctuation in 2017. In contrast, there was a sharp decline in the number of CBM&As of Malaysia before increasing from 2012 to 2017.
9. 198 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI Figure 5: The trend of Top 6 ASEAN countries Cross-border M&A activities from 2010 to 2020 in terms of a target firm Source: Reproduced from UNCTAD 2021 Database Figure 6 highlighted the trend of Cross-border M&A Activities from Top 6 ASEAN countries for ten years between 2010 and 2020. As can be seen from the graph, the majority of Cross- border M&A of ASEAN bidding firms from Singapore, Indonesia, Malaysia and Thailand. We can see that Singapore became the top country with the most significant number of CBM&As transactions by bidding companies during these ten years. Even though Vietnam is considered a famous Cross-border M&A target country, as illustrated in Figure 4, Vietnamese corporations were the least active CBM&As bidding firm with a maximum of seven acquisitions in 2018. From 2010 to 2013, there was a strong downward trend in CBM&As activities in Singapore, Malaysia, Indonesia and the Philippines. After that, the volume of Singapore and Malaysia transactions increased rapidly from 2013 to 2014 then gradually decreased in 2014. Figure 6: The trend of Top 6 ASEAN countries Cross-border M&A activities from 2010 to 2020 in terms of bidding firms Source: Reproduced from UNCTAD 2021 Database 2.2. Overview of Vietnam Cross-border Merger and Acquisition analysis in terms of target and bidding firms The two charts give information about the valuation of Vietnam Cross-border M&A transactions from 2010 to 2020. The bar chart illustrates the volume of Vietnam CBMA
10. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 199 transactions, whereas the line graph indicates the value of Vietnam Cross-border M&A. It is evident from the bar chart that, until 2017, there was a significant increase in the volume of transactions before sharply dropping down in 2018 and peaked in 2019. Similarly, the value of Vietnam CBM&As transactions reached the highest level of 1.6million USD in 2019 after a sharp decline in 2014. Figure 7: Vietnam Cross-border M&A activities from 2010 to 2020 Source: Reproduced from UNCTAD 2021 Database Figure 8: The number of Vietnam Cross-border M&A activities between 2010 and 2020 Source: Reproduced from UNCTAD 2021 Database Figure 8 gives information about the volume of Vietnam Cross-border M&A through target firms and bidding corporations over ten years between 2010 and 2020. Overall, it can be seen that over the period, the number of Vietnam CBM&As target firm transactions is significantly higher than the other one. Specifically, Vietnam target-firm CBM&As activities increased sharply from 2010 to 2014 before decreasing dramatically in 2018 and rose dramatically in 2019. On the other hand, Vietnam bidding firms are inactive in CBM&As as having the highest number of seven transactions in 2018. Figure 9 compares the value of Vietnam Cross-border M&A transactions in Target firm and bidding firm between 2010 and 2020. It can be seen that the value of Vietnam Target firm
11. 200 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI is higher than Vietnam bidding companies. The value of target corporations violated, whereas the trend of bidding firms remains stable until 2019, at which point the figures began to decline and had dropped significantly by 2020. ring the period. Moreover, the value of the CBM&As of Vietnam target firm decreased sharply in 2014 before hit the highest point in 2019. Figure 9: The value of Vietnam Cross-border M&A activities from 2010 to 2020 Source: Reproduced from UNCTAD 2021 Database 2.3. Impact of Covid-19 pandemic on Southeast Asia Mergers and Acquisitions activities in Q1-2021 Mergers and Acquisition’ activity in Southeast Asia has been affected by the pandemic. Even though M&A is thriving given the uncertain economic future, transactions are slightly more buyer-oriented in 2021. As prices are falling, purchasers are drawn to creative, sustainable, or tech-driven businesses, which are better aligned with the dealer’s estimate of market capitalization (Sandra Seah, S & Emmerik, E, 2021). Figure 10: The volume and value of ASEAN Cross-border M&A activities in Q1-2021 Source: Reproduced from Mergermarket Report 2021 The chart illustrates the number and value of ASEAN CBM&As transactions in the quarter of 2021. From the graph, we can see that the volume of inbound deals significantly was more
12. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 201 than twice the number of outbound M&A transactions, which are 76 and 35, respectively. As a result, the value of ASEAN inbound M&A transactions was considerably higher than outbound M&A deals combined with 24.5 billion USD. In conclusion, Cross-border M&A activities in Southeast Asia has shown a sign of recovery after having smaller deal volumes in 2019. The rate of deal-making recovery, on the other hand, maybe impeded if new Covid-19 variations appear, and border restrictions stay tight. Figure 11: The percentages of Southeast Asia Mergers and Acquisition outbound deals in Q1-2021 Source: Reproduced from Mergermarket Report 2021 According to Mergermarket (SEA) (2021), Asia was the most popular outbound important market in Q1 2021, accounting for 49 per cent of all offshore deals. The most important deals are with Chinese and Indian clients. Furthermore, as illustrated in the chart, transactions involving targets in the computer software, internet, semiconductors, and electronics subsectors have the highest prominence in M&A deals by accounting for 29% of total proportions of the sector. Table 1: Fundamental Southeast Asia M&A deals transactions in Q1-2021 Representative Date Transaction Sectors& Value No. Company to watch Regions transaction announced type keywords (million USD) 1 CLA Real Estate Holdings CapitaLand Limited 22/03/2021 Domestic Singapore Real estate 7,675 Pte Ltd (48.24% stake) acquisition 2 Amazing Parade Sdn Bhd Eastern & Oriental 26/03/2021 Domestic Malaysia Real Estate 356 Berhad (68.18% stake) acquisition 3 Sequoia Capital, J&T Express 28/02/2021 Overseas China Logistics 1,800 Hillhouse Capital, (undisclosed stake) acquisition /Indonesia Boyu Capital, CMB International Capital Corporation, ATM Capital
13. 202 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI 4 GIC Private Limited AC Energy Philippines 4/1/2021 Overseas Singapore/ Energy 416 (17.5% Stake) acquisition Philippines 5 Wattana Somwattana, Nirvana Daii Public 6/1/2021 Domestic Thailand Construction 286 Sornsak Somwattana Company Limited acquisition (84.4% Stake) 6 Warburg Pincus, MoMo 13/01/2021 Overseas Multiple/ Technology & 100 Macquarie Capital, acquisition Vietnam Software Tybourne Capital, Goodwater Capital, Affirma Capital, Kora Management Source: Reproduced from DC Advisory 2021 Throughout the first quarter of 2021, there was a prominent M&A deal that CLA Real Estate Holding acquired the remaining 48.24% stake in CapitaLand Limited, a Singapore- based listed real estate group, for $ 7.7 billion in real estate services and property. In addition, another critical transaction was the $1.8 billion raised by Indonesian express company J&T Express, involving a consortium of investors, including Chinese private equity giants Hillhouse Capital and Boyu Capital and Sequoia Capital China. Additionally, the Vietnam M&A deal was the $100 million raised by Momo, a Vietnam Innovation Ventures in terms of technology and software industry. 2.4. Forecast of Southeast Asia M&A transaction trend in 2021 According to Ernst & Young Global Limited (2021), Southeast Asia is expected to be a potential market for cross-border mergers and acquisitions. Golden Gate Ventures (2021) estimates that 45 transactions have been concluded, especially in e-commerce, fintech, media, advertising technology and social media, as the most prominent companies have acquired startups to expand their technology stacks. The Covid-19 epidemic has wreaked on the financial business in various ways, causing different transformations in the financial services industry. In Asia, there has been an emergence of technology companies working on banking and finance solutions. M&A transactions also focus on increasing investment in financial technology entrepreneurship, capturing technological progress and providing cross-industry products. As a result, it is forecasted that there will be an increase in M&A transactions in non- financial service sectors such as telecommunications, retail and media. Although M&A activity in 2020 is sluggish compared to previous years, it is expected that investment through public and private M&A in 2021 will be strong and consistent with economic growth (Nam, D et al., 2021). Generally, Vietnamese investors believe in the resilience of the Vietnamese Mergers and Acquisitions market in the post-Covid period. The Covid-19 epidemic had a considerable impact sharp decline due to the quarantine conditions. Therefore, it is expected that the value of M&A in 2021 will continue to decline. In addition, more investment will be made in large and mature Vietnamese companies. Even though the Vietnamese market is also significantly affected, effective prevention and control strategies mean that Vietnam is dedicated as a safe and attractive investment destination for foreign
14. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 203 investors, which could be an opportunity for Vietnam’s M&A market in the post-COVID period. THE Vietnam M & M&A market is expected to develop sharply in 2021 due to free trade agreements in 2021 such as CPTPP, EVFTA and EVIPA, which will promote M&A activities within countries. In addition, there will be an increase in investment trends in the healthcare industry, consumer goods or e-commerce, which are expected to become a significant point of M&A in 2021. Moreover, Vietnam has more opportunities to increase the M&A market with foreign countries. On the other hand, Vietnamese firms are expected to have difficulties applying new disciplines and restrictions from FTA. CONCLUSION In conclusion, this research examined Mergers & Acquisitions (CBM&As) trends involving companies from the Top 6 ASEAN countries, including Indonesia, Thailand, Philippines, Vietnam, Malaysia, and Singapore. The analysis primarily focused on delivering a broad picture of M&A activities in 2020. As a result, it can be concluded that telecommunications, retail and media are forecasted to significantly going up in the M&A market. In addition, the Vietnamese M&A market is expected to develop due to the implementation of free trade agreements. Even though this inquiry may need to be replicated in future studies, the study’s various drawbacks and limitations did not diminish the overall legitimacy and significance of the investigation, which primarily contributed to characterizing the various perspectives and attributes of country risk and M&A relationship. LIST OF REFERENCES 1. ASEAN. (2021). Investing in ASEAN 2021-2022. ASEAN. 2. Aybar, B. &. (2015). Financing decisions and gains from cross-border acquisitions by emerging-market acquirers. Emerging Markets Review, pp. 69-80. 3. Calderún, C., Loayza, N., & Servộn, L. (2004). Greenfield Foreign Direct Investment and Mergers and Acquisitions: Feedback and Macroeconomic Effects.Policy Research Working Paper. 4. Chen, F. &. (2014). Integration risk in cross-border M&A based on internal and external resource: empirical evidence from China. Quality & Quantity, pp. 281-295. 5. Cunha, A. d. (2018). The Impact of R&D on M&A Value Creation. 6. Daiwa Securities Group Inc. (2021, 05 07). Asia Access Quarterly: Q1 2021: Asian cross-border M&A activity. Retrieved from DC Advisory: asia-access-quarterly-q1-2021-asian-cross-border-m-a-activity/#gref 7. Deng, P. &. (2015). Cross-Border Mergers and Acquisitions by Emerging Market Firms: A Comparative Investigation. International Business Review, pp. 157-172. 8. Du, M. &. (2015). State ownership, institutional effects and value creation in cross-border mergers & acquisitions by Chinese firms. International Business Review, pp. 430–442. 9. Ernst & Young Global Limited. (2021, Mar). Will Covid-19 turbo-charge M&A and transformation? Global Capital Confidence Barometer, Asia-Pacific highlights. 10. Evren Arık, A. M. (2015). Do Mergers and Acquisitions Create Wealth Effects? Evidence from Twenty Emerging Markets. Eastern European Economics, pp. 529-550. 11. Governance Indicators:
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