KPMG Study: Despite Economic Downturn, U.S. Companies Remain Leading Acquirers of Emerging Market Companies

KPMG Study: Despite Economic Downturn, U.S. Companies Remain Leading Acquirers
of Emerging Market Companies
- United States Remains Top Target for Emerging Market Acquirers

NEW YORK, Oct. 5 /PRNewswire/ -- Despite the economic downturn, U.S.-based
companies continued to lead in completing merger-and-acquisition (M&A) deals
with emerging or high-growth market companies during the first half of 2009,
according to KPMG International's latest Emerging Markets International
Acquisition Tracker (EMIAT) study.

The KPMG study revealed that in the first half of 2009, U.S. companies
completed 88 emerging and high-growth market acquisitions, primarily with
companies in Central and Eastern Europe. The United States also topped the
list of countries where emerging and high-growth market companies made their
acquisitions, according to the study, which tracks completed deals in which an
acquirer took at least a 10 percent shareholding interest. In all, 18 U.S.
companies were acquired by emerging market companies during the period.

As reported by KPMG, this mix of acquisitions contrasts sharply with activity
during the second half of 2008, when U.S. companies acquired 122 emerging and
high-growth market enterprises, primarily in China and other "BRIC" (Brazil,
Russia, India and China) countries, and emerging and high-growth market
companies completed 35 U.S. acquisitions.

"Although U.S. companies have been hit hard by the economic downturn, their
continued willingness to enter into emerging market acquisitions signals their
understanding that a global footprint is critical for a 21st-century company,"
said Mark Barnes, principal-in-charge of KPMG LLP's U.S.-High Growth Markets
practice.

"The 28 percent decline in the pace of U.S. acquisitions reported in our
recent study may also signal a more discerning, strategic approach to
acquisitions than in the past, when deal money was easier to come by," Barnes
added. "We believe this more measured approach to acquisitions may be the new
face of emerging market activity."

Daniel D. Tiemann, national leader of KPMG LLP's Transaction Services
practice, said confidence is returning to the market.

"Executives have stared into the abyss, and they've survived it," said
Tiemann. "Now that some companies have become comfortable with their position
in the post-recession marketplace, they are exploring their strategic options
in order to grow their businesses. Many are taking advantage of distressed
competitors, seizing a chance to consolidate the market while potentially
expanding their global reach."

New U.S. Focus on Central and Eastern Europe
Central and Eastern European companies were the top emerging and high-growth
market targets for U.S. companies, according to the KPMG study findings. In
addition to Central and Eastern Europe (28), U.S.-based companies made the
majority of their high-growth market acquisitions in China (17), Brazil (13),
and India (12) in the first half of 2009.

In the second half of 2008, the top emerging and high-growth market targets
for U.S. companies were located in China (45), India (19), Brazil (17),
Central and Eastern Europe (11), and Korea (11), according to the KPMG study.

For developed-to-emerging (D2E) deals globally in the first half of 2009,
Central and Eastern European companies were also the most targeted, with 127
total acquisitions. Other popular targets overall for D2E deals included
China (41), India (34), Russia and Commonwealth of Independent States (CIS)
(31), and Brazil (26), the KPMG study indicates.

According to EMIAT study findings for the previous six-month period, the most
popular emerging and high-growth market targets overall for D2E deals included
Central and Eastern Europe (75), China (73), Russia and CIS (52), India (45),
and Korea (40).

Emerging Markets' M&A Volume Shrinks by Half
According to the most recent KPMG study, the first half of 2009 saw only 70
emerging-to-developed (E2D) deals, a 50 percent decline over the previous
six-month period, which saw 142 deals where emerging market companies were the
acquirers. The decline in the number of D2E deals for the period was less
significant, with 304 registered, versus 360 in the second half of 2008.

"The credit crisis has clearly affected emerging market companies' M&A
activity into the developed economies," said KPMG's Mark Barnes. "In
addition, we believe the data in our study may also reflect a trend of some
governments encouraging their corporate entities to become more selective and
strategic in their cross-border acquisitions overall."

The KPMG study findings revealed that China was the top high-growth market
acquirer of companies in developed economies in the first half of 2009 with 16
deals, followed closely by Central and Eastern Europe (12), Russia and CIS
(11), India (10) and South Africa (10). The least active "BRIC" country was
Brazil (1).

After the United States (18), the most popular targets for E2D deals in the
first half of 2009 included the Netherlands (11), Australia (10), and the
United Kingdom (10), according to the KPMG study.

In the second half of 2008, the top high-growth market acquirer of companies
in developed economies was India (39) followed by the Middle East (25), China
(21), Central and Eastern Europe (13), and Russia and CIS (13), according to
the KPMG study.

"India provides a perfect example of why it would be wrong to write off
emerging markets' cross-border aspirations at this stage," said Arun Kumar,
principal-in-charge of KPMG LLP's U.S.-India practice. "While cross-border
deals are down, India's economy is still growing, there is post-election
optimism, banks remain liquid, and finance is available for the right deal.
Ambitious companies are awake to the fact that valuations are dropping. They
continue to look abroad, but with added caution, after witnessing the
challenges the global economy has placed on their own national champions in
their overseas ventures. This caution will not last forever."

About KPMG's Emerging Markets International Acquisition Tracker (EMIAT) Study:
The research analyzes deal flows between 12 selected "developed" economies -
the United States, the United Kingdom, Canada, Spain, France, Germany, the
Netherlands, Italy, Australia, Israel, Hong Kong and Japan - and 11 selected
"emerging" and "high-growth" economies or regions, comprising India, China,
Russia, Brazil, South Korea, Vietnam, Macau, South Africa, Nigeria, the Middle
East, and Central and Eastern Europe.

Only those transactions classed as "completed" between January 2003 and June
2009 in which an acquirer took at least a 10 percent shareholding in an
overseas company were included. Deals that involved backing by a private
equity firm or other financial institution were not included. The data was
provided by ZEPHYR - a Bureau van Dijk Electronic Publishing product.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S.
member firm of KPMG International. KPMG International's member firms have
137,000 professionals, including more than 7,600 partners, in 144 countries.

Contact: Ichiro Kawasaki / Robert Nihen
KPMG LLP
201-307-8640 / 201-307-8296
ikawasaki@kpmg.com / rnihen@kpmg.com

SOURCE KPMG LLP

Ichiro Kawasaki, +1-201-307-8640, ikawasaki@kpmg.com or Robert Nihen,
+1-201-307-8296, rnihen@kpmg.com, both of KPMG LLP