BRIC Business Buying Spree
In El Mundo, Marta Delgado reports that developing nations are now buying more businesses in Europe and the United States than the other way around.
According to a report by PricewaterhouseCoopers (PWC), the number of M&A transactions has changed course over recent years. A decade ago, the United States and Europe were leaders in these types of transactions. But these days, emerging nations are the new buyers.
Between 2008 and 2012, fast-growing economies like Russia, China, Brazil and the Middle East have invested a combined US$160 billion towards acquisitions in the United States, Australia, Germany, the United Kingdom, Australia and Japan. That is US$10 billion more than were allocated for acquisitions made by mature economies in emerging nations.
2012 alone saw total buying volume amount to $32.6 billion, made by emerging nations in mature economies. That is three times more than in 2005.
There are many reasons that explain this dramatic shift. Certain companies are trying to reach new sales channels for their products, like Wipro Technology Services, and Indian company that recently purchased 100% of Science Applications International (a North American company) for US$105 million.
Additionally, companies originating from emerging nations are looking for more competitiveness and to access established markets. An example of such a company is China’s Bright Food, which acquired Weetabix.
This radical transformation in the M&A market is facing multiple obstacles, starting with the pre-conceived ideas BRICs and mature economies have of each other, states the PWC report.