Shuanghui International Holdings Ltd's $4.7 billion agreed offer for Smithfield Foods Inc has injected life back into Asian M&A, and helped Morgan Stanley to claim the top slot in the advisory league table in the Asia-Pacific region as the mid-year benchmark approaches.
Morgan Stanley is the sole financial adviser to the Chinese company and is also providing committed financing to the deal, pushing the U.S. bank to No. 1 slot in Asia M&A ex-Japan league table, nudging it past Swiss bank UBS , according to Thomson Reuters data for M&A that has any Asia-Pacific involvement excluding Japan.
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Smithfield's financial adviser Barclays plc has jumped to No. 6 from 17th position before the announcement of the deal, which ranks as Asia-Pacific's biggest M&A this year.
Goldman Sachs , which has been Asia Pacific top M&A adviser for past two years, has slipped to third position. The region has had a slow start to the year, with M&A volumes down 3.4 percent so far this year to $155 billion. In contrast, M&A volumes in Americas has risen 20 percent to $465 billion so far this year.
Asia's sluggish M&A market so far this year is a surprise to those in the market, as the region's corporates are flush with cash and looking to expand beyond their local market. But company boards and CEOs have generally been cautious about making a big M&A bet due to the uncertain economic environment in China, and the world's other major markets, according to investment bankers.
On Wednesday, privately-owned Shuanghui International made a bold and politically sensitive move to buy Smithfield Foods, the world's biggest hog producer, for $7.1 billion, including debt, beating competition from Thailand's Charoen Pokphand Foods Plc, controlled by Thai billionaire Dhanin Chearavanont.
The deal, which is aimed at satisfying growing Chinese appetite for U.S. pork, is far from over and still needs approval from U.S. regulators and will be voted by Smithfield shareholders.
The transaction has many milestones, including the biggest acquisition by a Chinese company of a U.S. target and the biggest Chinese outbound deal in the consumer staples sector.
Over the past decade, energy and power sector have accounted for about 41 percent of all China's $373.4 billion worth of announced outbound deals, Thomson Reuters data shows.
That push has been led by Chinese state-owned companies, that have aggressively pursued purchases of energy and mining companies in an effort to secure resource supplies.
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(Reporting by Denny Thomas; Editing by Michael Flaherty and Jeremy Laurence)