Wednesday, February 02, 2011

M&A activity in Asian B2B media picks-up in 2010

BSG published its semi-annual Tracker Report on M&A activity in Asian B2B media earlier this week. In 2010, M&A activity in that sector recovered in terms of the number of deals - rebounding from a low of just 10 deals in 2009 to 20 last year.

Despite the fact that the number of transactions doubled in 2010 compared with 2009, the total value of those transactions dropped 7% to US$137 million last year. That resulted in an average deal value of just US$6.8 million in 2010 - the lowest average since 2002.

China-based transactions accounted for 40% of the deals in 2010, while despite its rapidly expanding economy, just one deal was completed in India in 2010. The lack of transactions in India could stem from a number of factors: regulatory and legal challenges, a lack of quality targets and Indian sellers expecting unrealistic valuations.

The most active acquiring company since 2002 (when BSG began tracking M&A activity) continues to be UBM. The company completed five deals in Asia last year and we expect that trend to continue in 2011. Two other companies to watch this year are and Reed. Alibaba is sitting on a mountain of cash (approximately US$1.3 billion) and has committed to investing US$100 million in the coming years to build its e-commerce infrastructure. On the other hand, Reed Exhibitions which had not closed a transaction in Asia since 2007, suddenly announced two deals in December. Together, UBM Asia, Reed Exhibitions and Alibaba can be expected to generate considerable M&A activity in 2011.

In 2011, BSG anticipates the trend of an increasing number of deals at lower average deal values will continue. We are forecasting 2011 to result in transactions totaling between US$170 million and US$200 million - of course one or two blockbuster transactions from a giant like Alibaba could rapidly change that.

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