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Asia Pacific a hotbed for M&A activity for agency holding companies

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Mergers and acquisitions (M&A) activity in Asia Pacific rose by 15% this year, with total deal value in Asia Pacific increasing from US$791 million to US$908 million in the first half of the year (H1 18). Meanwhile, China witnessed a growth from US$331 million to US$399 million, according to a recent report by independent consulting firm R3.The report added that the increase was driven by agency holding groups, which is in sharp contrast to the global analysis where unconventional and martech firms led the way. In Asia Pacific, the agency holding groups witnessed a deal count of 15 out of the total deals in the region in the first half of 18, translating to a value of US$273 million.The largest deal in the region came from an unconventional buyer, Suzhou Jinfu New Material, R3 said, which acquired Gong He Sheng Shi in China for US$156 million.Meanwhile, only four holding groups increased their number of acquisitions in the first half of 2018, compared to the same period last year - Omnicom, Publicis, Hakuhodo and IPG. Omnicom, Publicis and IPG also saw larger deal sizes during the period, each worth US$204 million, US$132 million and US$42 million respectively. Meanwhile, Dentsu and WPP, the two most traditionally aggressive holding companies in the M&A space both saw year-on-year declines in the number of deals and deal value in the H1 18.[gallery link="file" ids="229286,229287,229288,229289"]The biggest deal among holding companies for the first half of 18 came from Chinese independent digital agency Hylink Group, which acquired outdoor media group Longfan Media for US$56 million, following its acquisition. This was closely followed by Hakuhodo, which acquired Vietnamese IMC group, Square Communications, for US$53 million.In Asia Pacific, 21% of acquisitions targeted media specialists and 17% were for creative full-services agencies. Overall, approximately 30% of M&A deals fell in the "others" category, which includes research firms, direct marketing, healthcare marketing and media owners. This was a sharp contrast with the overall global trend, which saw an increase in demand for martech and digital full-service firms.[gallery link="file" ids="229290,229291"]According to Sabrina Lee, managing director of R3 China, agency holding groups invested nearly US$100 million in creative full-service agencies, but also made significant acquisitions in the digital and martech space. Lee added that this signifies the importance they place on having well-rounded capabilities to serve their clients in the region."The demand for local media specialists drove a large percentage of the marketing M&A activity in the first half of this year. The unique media landscapes of several APAC markets – particularly China – are driving consultancies and unconventional buyers to seek out experts in this space to boost their own capabilities," Lee added.

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