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Analyst: Tencent leads 2020 M&A activity

January 22, 2021

Tencent is the leading player in merger and acquisition (M&A) activity in the tech, media and telecom (TMT) sector with nine deals of value greater than or equal to $50 million(€41m) worth $6.6 billion in 2020, according to data and analytics company GlobalData.

M&A activity declined during the first half of 2020, especially in Q2 with just $95 billion worth deals taking place due to the Covid-19 pandemic. However, the activity recovered sharply in the second half to reach a total transaction value of $903 billion for the full year.

Snigdha Parida, Thematic Research Analyst at GlobalData, comments: “The M&A market has coped well with the impact of the Covid-19 pandemic, as leading companies saw opportunities to reinforce their market positions by either acquiring new capabilities or by acquiring distressed competitors.”

Out of the largest companies, a third made acquisitions in 2020. They made around 60 M&A transactions during the year, with a total deal value of $186.5 billion. Among these 60 transactions, the APAC region alone saw 22 transactions, led by the Chinese market, which was mainly driven by Tencent and Alibaba.

Parida continues: “China is the leading market in APAC for M&A, with Tencent, Alibaba and Xiaomi as the most active players. Some of the companies acquired by Tencent include Sogou for $3.5 billion; Leyou for $1.4 billion; and Voodoo for $0.5 billion. Most of these acquisitions were driven by big data, digital media, ecommerce, and gaming themes.”

Last year was a landmark year for the TMT sector for M&A activity. The global outbreak of Covid-19 saw both businesses and individuals accelerate their adoption of technology solutions to suit new patterns of work and everyday life.

Parida concludes: “M&A activity is expected to continue at a high level throughout 2021 by the likes of Tencent and companies that focus on their key technologies and adjust to the realities of the Covid-19 pandemic.”

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