Merger and Acquisition in Malaysia

Mergers and acquisitions in Malaysia are at an all-time high, led by several big players such as Singapore Airlines, AirAsia X, and Malaysia Airlines. These three companies alone have had more than a dozen transactions since 2009. The recent financial crisis has definitely given way to increased M&A activity in the country. Kuala Lumpur Stock Exchange has seen the number of value traded by its members grow from 1 billion RM in 2007 to 18 billion RM just last year. While 2010 recorded a drop to 7.5 billion RM, according to the Business Times Penang, this year it has already achieved 11.7 billion RM as of December 2011.

As of October 2011, Malaysia has seen close to 100 M&A deals worth more than RM 40 billion. This is supported by recent figures from ‘Dealogic’ which show that the Malaysian economy is following a period of solid growth and expansion with increased M&A activities over the last 3 years. In addition, Dealogic reported that between January and August 2011, Malaysian companies announced the largest number of transactions in Asia outside China (with Taiwan accounting for a considerable share), which signals Malaysia’s attractiveness as an investment destination.

There are many reasons why Malaysia has become such an attractive market for buyers. A report from PwC stated that over the next 5 years, Malaysia’s GDP is expected to grow at a CAGR of 5.7% making it the fastest growing market among its developed economy peers. In the same report, PwC also predicted that Malaysia will become one of the four “superstar” economies in the G-20 based on its GDP growth forecast and its expected ranking by total population size. This finding is supported by AlixPartners with their report that Malaysia is projected to be in a top 5 position in terms of GDP growth by 2020 among all the Southeast Asian Countries.

According to the Harvard Business School and AT Kearney, Malaysia is at a stage of economic development that is critical for long-term growth in companies. The Malaysian government also makes it easy for foreign businesses to do business in the country with a “100% foreign ownership” policy. This policy will continue to encourage foreign investment in Malaysia, which will ultimately lead to more M&A activities.

In 2013, Malaysia ranked #1 in digital prowess out of 20 cities in APAC (Asia Pacific) and #3 globally out of 60 cities across North America, Europe and Asia Pacific regions.