Trade buyers in emerging economies appear to be losing their appetite for merger and acquisition (M&A) targets in developed nations, says a KMPG report. After a surge in cross-border activity in the first six months of 2010, the second half witnessed a decline in the number of M&A deals inked by companies from emerging markets with firms in developed countries, forcing Western businesses to reconsider their attractiveness to overseas investors.
According to KPMG's Emerging Markets International Acquisition Tracker (EMIAT), 239 Emerging-to-Developed (E2D) deals were recorded in the second half of 2010. In contrast, 265 such deals were seen in the first half of 2010 (significantly up from the 195 in the second half of 2009).
"After the burst of activity early in 2010, there was a general expectation that E2D deals would continue to increase. However, despite some cash-rich trade buyers and the presence of some hungry sovereign wealth funds, it hasn't really happened.
"That's not because potential targets are looking too expensive. Rather, I think that the developed markets themselves are -- for the time being -- no longer as attractive a proposition as they were previously to these buyers," KPMG UK Chairman (High Growth Markets Practice) Ian Gomes said.
A key reason behind the creation of the EMIAT was to monitor the convergence of E2D and D2E
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