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Asia leads way as M&A deals rise

The first quarter of 2011 saw a slight rise in the number of global mergers and acquisitions but an overall drop in the value of deals, a report by accountancy PwC has revealed.

There have been 37 deals worth $50 million (£30.45m) or more – totalling $20.3 billion - in Q1 of 2011, compared with 35 deals in the same period in 2010 with a total value of $25.4bn.

Asia and Oceania are driving activity, accounting for 65 per cent of the total volume of deals, with the UK and Eurozone representing 14 per cent, and the US 16 per cent.

Home building experienced the largest growth, at 30 per cent compared to 16 per cent the year before, with construction also making up a third of the transactions, as it had in 2010. The final quarter of 2010 saw the number rise to 59 deals, worth $21.9bn.

The report says: “With more than $68bn worth of deals in 2010, as compared with about $42bn in 2009, the engineering and construction industry is enjoying a strong period of M&A activity.

“While the Q1 2011 deal activity is down from Q4 2010 activity, more deals are expected in 2011, with continued growth in Latin America and Asia.”

The value and volume of M&A activity is expected to continue to grow as the global economy recovers, acquirers strengthen their balance sheets, and companies within the sector gain confidence in capital markets.

Mega-deals (worth at least $1bn) are on pace to exceed the strong growth levels in 2010 after doubling from two in the final quarter of last year to four in the first quarter of 2011.

Cross-border transactions realised a sharp decrease of almost 35 per cent in first-quarter of 2011 compared to 2010. A large portion of the within-border activity occurred in China and South Korea.

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