Mergers and acquisitions to pick up in Asia: J.P. Morgan

Mergers and acquisitions to pick up in Asia: J.P. Morgan

SINGAPORE (Dow Jones): The pace of mergers and acquisitions is
likely to pick up in Asia as sharply depreciated asset values
begin to stabilize, according to a key executive at J.P. Morgan
Securities Asia Pte Ltd.

Hurt by the crisis, Asian companies are now viewing tie-ups or
takeovers as a way of improving their financial position, said
the company's Singapore-based Managing Director Cezar Consing.

Foreign companies, meanwhile, are taking advantage of
expanding within the region at a much lower cost compared with
pre-crisis values, he added.

"In terms of M&A (merger and acquisition) transactions, things
are looking up for Asia," Consing said in an interview with Dow
Jones Newswires. "When things stabilize, deals will get cut."

J.P. Morgan Securities Asia is a unit of U.S. investment bank
J.P. Morgan & Co. The group is involved in such areas as advising
on mergers and acquisitions, asset management, managing
investment portfolios and raising equity and debt capital.

The outlook for the region hasn't yet turned rosy for the
region, Consing said. But, he said the increase in the number of
mergers and acquisitions is a sign that the region is on the
mend.

The talk of mergers and acquisitions have so far exceeded the
actual level of activity, Consing said. He estimated that only
some 30 merger-and-acquisition transactions valued at above
US$100 million have taken place this year.

For the rest of the year, the region could see about twenty
more mergers, with each transaction valued at a minimum of US$100
million, Consing predicts.

Consing, who's also co-head of the company's emerging Asia
investment banking division, said he and his colleagues were
involved in structuring the recent 45 percent stake sale of
Nestle Philippines by San Miguel Corp to Nestle SA that was
announced Friday.

The Nestle Philippines transaction, valued at about 30 billion
pesos (US$694 million), ranks as the largest single foreign
investment in the Philippines this year, he said, adding it's a
significant development in a region where liquidity is tight.

The group was also recently involved in two mega transactions
- the merger of British Telecommunications Plc and AT&T Corp and
that of British Petroleum Co and Amoco Corp.

In Singapore, the group assisted in the merger between
Singapore's Neptune Orient Lines and American President Lines of
the U.S. last year.

J.P. Morgan Securities is currently involved in several other
merger and acquisition deals, none of which has reached
completion, Consing said. He declined to provide details except
to say the merger candidates are "all over the region" and not
restricted to any one industry.

With the difficulties caused by the regional financial crisis
in raising cash from capital markets given widening interest rate
spreads, more and more Asian companies are likely to consider
mergers and acquisitions as a "way of cashing out and spreading
growth," he said.

It was less than two years ago, Consing pointed out, that
Asian companies were reluctant to sell, given the region's
tremendous growth potential.

He said companies should increasingly realize that at a time
when markets are performing poorly and economies are weak, the
value of a company is of greater importance than control.

"I think there'll be more of these transactions, where you'll
have non-Asian MNCs (multinational corporations) buying into
Asian companies," Consing said. "That's because there's not
enough capital in Asia right now."

In Asia's emerging markets, Consing said mergers and
acquisitions are "all a part of the restructuring and healing
process," adding they will mean more efficient companies and a
more competitive operating environment.

As a practitioner, Consing said he hopes the recovery of Asian
markets doesn't retard the pace of mergers and acquisitions in
the region.

"Hopefully, people realize that a good partnership and good
M&A transaction can do so much for a business," he said.

In the months ahead, Consing said he expects to see more deals
done, but adds it's likely the total value of these deals may not
accurately reflect the number of transactions because of the
deflated asset values.

For the year to-date, in Asia excluding Japan, about 414 such
transaction have been completed totaling about US$17 billion in
value, according to J.P. Morgan data.