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M&A Surges in Asia While the US and Europe Suffer

Mergers and acquisitions boomed in Asia in the first quarter in sharp contrast to a slump in deal volume in Europe and the US, underlining a global shift in activity in the wake of the credit crisis.

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The value of global M&A overall rose 6 per cent to $442bn (£293bn) in the first quarter of 2010, boosted by the surge of deals in Asia, according to data from Mergermarket.

There were $89.4bn worth of deals in the Asia-Pacific region, excluding Japan, during the first three months of the year - an increase of almost 93 per cent from the same period a year earlier.

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However, European M&A activity weakened for the fifth consecutive quarter as sovereign debt worries deterred corporate acquisitions. The value of deals in Europe fell 5.7 per cent during the period, the slowest start to the year for the region since 1998. The US was quieter. In spite of a series of big healthcare deals, US activity dropped 25.6 per cent to $148bn in the quarter.

Bankers said the flow of activity to Asia was expected to continue this year as chief executives shifted their focus from sluggish domestic economies towards faster-growing markets.

"Emerging market activity is disproportionate to where it has been in the past and looks set to continue to grow," Henrik Aslaksen, global co-head of M&A at Deutsche Bank, said.

Gary Posternack, head of M&A for the Americas at Barclays Capital, said: "M&A is fundamentally correlated to growth in [gross domestic product]. A buyer needs to have confidence not only in a target's operations but also in its own, and having the economic winds at one's back really helps."

Carlo Calabria, European head of M&A at Bank of America Merrill Lynch, said that, after the challenges of the past two years, chief executives in Europe were still reluctant to do deals.

"This cycle is an exception to the general rule of thumb that M&A rebounds lags that of the equity market by two quarters," he said.

However, Wilhelm Schulz, European head of M&A at Citigroup, said there had been signs of a return of "strategically driven" deals.

Goldman Sachs took the top position in the global advisory league tables, having worked on $162bn worth of deals, followed by Credit Suisse in second place with $159bn worth of deals. Citigroup ranked third, advising companies on deals with a total value of $125bn.