In the first half of 2011 US-based companies completed the most merger and acquisition (M&A) deals with emerging and high-growth market companies, with nearly double the number of acquisitions made by the second-ranked country, according to a KPMG study.

The firm's Emerging Markets International Acquisition Tracker, which tracks completed deals in which an acquirer took at least a 5% shareholding interest, revealed that in the first half of 2011, US-based companies completed 144 emerging and high-growth market acquisitions, up from 124 in the second half of 2010. Canadian companies made the second most acquisitions of emerging market companies with 82 in the first half of 2011.

In the first half of 2011, the most popular targets for US companies were China (26), Brazil (25), central America and the Caribbean (21), India (18), other South American countries (16), and south and east Asia (16).

“US corporate interest in emerging markets has continued to increase, as companies with strong balance sheets were prepared to pay for attractive opportunities,” says Mark Barnes, principal-in-charge of KPMG’s US-high growth markets practice. “The opposite investment flow, from emerging countries to the US, also increased. US businesses may be seen as the most appealing targets because of the strength of their brands, technology and intellectual capital in a market that is tested and proven.”

US and Australian companies were the most popular investment targets for emerging and high-growth market companies, with 47 and 22 acquisitions made in each country in the first half of 2011, respectively. In the second half of 2010, there were 40 such acquisitions made in the US. The south and east Asia category (14) and India (11) accounted for the majority of acquisitions made in the US in the first half of 2011.

Overall, emerging and high-growth market companies made 220 acquisitions in developed economies in the first half of 2011, down from 237 during the second half of 2010, according to the study. South and east Asia was the top acquirer in emerging-to-developed deals with 54 acquisitions in the first half of 2011, followed by India (38) and China (32).

“Uncertain economic conditions in many developed countries – particularly in the eurozone – have slowed the volume of acquisitions made by emerging market companies,” said Mr Barnes. “While the short-term outlook is unclear, we expect the continued rise of the major emerging markets to fuel more acquisitions in developed economies over time, as there are deals to be had at discounted prices.”
Developed-to-emerging deals increased slightly overall to 693 deals in the first half of 2011 versus 689 registered in the previous six-month period.

Following the US (144) and Canada (82), the UK (62), Japan (61) and other European countries (61) made the most deals in emerging market economies.

The most popular emerging market targets for developed countries included south and east Asia (129), China (91), other South American countries (83), Brazil (69), and central and eastern Europe (67).
In the first half of 2011, there were 117 total emerging-to-emerging deals, down from 144 in the previous six-month period. South and east Asia was the most popular target, registering 22 inbound deals, according to the study. Russia was the leading emerging market acquirer in other emerging markets with 22 deals.