With US majors having already flexed their acquisition muscles this year, notably through Google and Facebook, the focus is turning towards Asia, where growing consolidation and reserves of capital by the regional giants is fuelling rumours of major takeovers. Business transfer agents have already been kept busy in the dynamic China space, as Tencent and Alibaba continue their spending sprees through to 2014, yet multibillion-dollar exits may be around the corner in other segments of the market. Unsurprisingly, more tech firms are moving into the vibrant Asian markets. For example, innovative mobile recycling business Redeem Ltd, for whom we facilitated a management buy in, successfully operates in the Asian marketplace.
Flipkart and Myntra saga continues
This long-standing Flipkart/Myntra rumour has been the major potential deal coming out of India throughout 2014. Flipkart is the country’s largest e-commerce business while Myntra is the biggest exclusive fashion Internet retailer locally. The two companies started merger talks in January, but Myntra founders chose to invest in their own growth by raising a new round of $50 million in funding. However, common investors on both sides, Accel Partners and Tiger Global, continue to eye the deal, which is increasingly becoming important as competitors grow in the dynamic Indian market. Amazon is expanding rapidly in India while Walmart has already stated it will be entering the country in the near future. India’s online fashion retail industry almost doubled in value in 2013 to $559 million.
Baidu closes in on Ctrip
Ctrip, China’s most popular online travel booking site, has been attracting suitors for some time. The company has seen bids from both Alibaba and Tencent, but continues to operate outside of the influence of the two e-commerce giants. However, Baidu, China’s dominant search engine business, looks favourite to cement the acquisition, having already made strong inroads into the booming local online travel landscape through the purchase of Qunar for $306 million in 2011. The deal would merge the two entities to create a near-monopoly in China’s flight and hotel bookings landscape. The merger is attractive for Ctrip as it would lessen costs for the online travel operator, who already reportedly pays Qunar to bolster its bookings. Baidu’s ability to optimise Ctrip’s search engine strategy and finance continued growth is also attractive to the travel site. Baidu has a market cap of around $53 billion. At present, Ctrip is valued at around $7.2 billion while Qunar is valued at $3.5 billion. The merger of the two would create a $10-billion online travel giant.
Japan’s Softbank interested in Europe’s Vodafone
After federal regulators prevented Japanese telecoms giant Softbank from acquiring US-based T-Mobile, the company is eyeing Vodafone, which has a major presence in Europe and also a 45% stake in US-based Verizon. The interest continues a trend of major Japanese investments in external markets. Softbank has a leading position in Japan mobile and fixed services, and the company also holds a 37% stake in China’s Alibaba. If Alibaba follows through with its proposed IPO this year, Softbank will have the necessary liquidity to perform a major purchase.
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