Mergers and acquisitions rose for the first year since 2007, potentially marking the start of a new, multiyear M&A cycle in which emerging economies account for a bigger share of global dealmaking.
Cheap debt, record cash piles, the need to outpace sluggish economic growth, and positive market reactions to many deals in 2010 should embolden companies to strike more deals, they say.
"We feel M&A volumes will improve next year, there's certainly going to be more cross-border activity than ever, and Asia -- again -- will be a bigger part of the equation," said Scott Matlock, chairman of international M&A at Morgan Stanley.
"The increase in M&A activity in 2011 should exceed that of 2010," said Henrik Aslaksen, Deutsche's global head of M&A.
"There's more confidence, there's ample liquidity, financing costs are attractive, and there's an intense focus amongst corporates to identify growth opportunities," he added. "The pipeline is very broad-based. It's not just confined to one to two sectors." Senior executives on average expect $3 trillion of M&A next year, a recent Thomson Reuters/Freeman survey found.
France Telecom has already paid top dollar this year for a 40 percent stake in Morocco's Meditel and is expected to make more acquisitions in Africa, a frontier market with 1 billion people and mobile phone penetration of around 30 percent to 40 percent.
Europe's third largest telecoms company is a proxy for peers, including Telefonica SA that have also paid top money in emerging nations recently to get relief from the fierce competition in mature domestic markets.
But now Europe's telecommunications majors must deal with competitors from emerging markets and sometimes the billionaires behind them.
India's Bharti Airtel Ltd became the standard bearer for emerging market companies seeking high-growth acquisitions when it bought the African unit of Kuwait's Zain for $10.7 billion, including debt, this summer.
Russia's Vimpelcom Ltd, 40 percent owned by Mikhail Fridman's Alfa Group, is seeking to buy Italian and African assets from Naguib Sawiris's Weather Investments for $20.6 billion, including debt.
Fridman waged a lengthy corporate war with Vimpelcom co-owner Telenor ASA and Sawiris built his empire by entering some of the world's riskiest markets, including North Korea.
Vimpelcom's acquisition -- which would give it control of Italy's Wind and Africa-focused Orascom Telecom Holding -- is embroiled in a messy fight between Sawiris and the Algerian government.
But aside from several major telecommunications tie-ups in the developing markets, and the odd banner deal such as Chinese carmaker Geely's purchase of Volvo from Ford, many deals from newer markets were aimed at securing resources or technologies.
(C) REUTERS
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