Disruptive M&A How to deal with ever-changing technologies?

Disruptive M&A How to deal with ever-changing technologies?

Disruption overview

? 2018. For information, contact Deloitte China.

Disruptive M&A | Private and confidential

2

The world is changing quickly We are living in an era with significant improvement in technology

Internet users

1990s 400M

Mobile phone users

318M (1998)

Average internet speed

55kbps

Annual e-commerce USD 130

spend

million (1999)

Computing costs (cost per GFLOPS)

USD 222

Storage costs (per GB of data)

USD 569 (1992)

2018 3,900M

4,570M

91,000kbps

USD 2.84 trillion USD 0.03 (2017) USD 0.02

Time required to reach 50 million users (years)

Airline

65.0

Automobile

62.0

Telephone

50.0

Electricity

46.0

Credit Card

28.0

TV

22.0

ATM

18.0

Computer

14.0

Cell phone

12.0

Internet

7.0

iPod 4.0

YouTube 4.0

Facebook 3.0

Twitter 3.0

WeChat 1.0

Pokemon 0.1

Source: Statista, Cable UK, company websites, Deloitte analysis

? 2019. For information, contact Deloitte China.

Disruptive M&A | Private and confidential

3

Technology assets are getting more popular Non-tech Chinese buyers are more interested in tech assets and willing to enter into larger deals

Tech buyer Non-tech buyer

Shares of techrelated deals from Chinese buyers, by value

54.1 59%

51.8 53%

51.6 64%

59.5 49%

54.0 47%

= Total deal size (USD billion)

41%

2015

Average size of tech-related deals involving Chinese buyers (USD million)

1,000 800 794 600 400 413 200 0 2015

47% 2016

2016

36% 2017

51% 2018

53% 2019 LTM

731 636

2017

2018

2019 LTM

Note: (1) Announced deals with size larger than USD 100m; (2) internet companies refers to those operating in internet/e-commerce field (3) 2019 LTM refers to April 2018 to March 2019 Source: Mergermarket, Deloitte analysis

? 2019. For information, contact Deloitte China.

Disruptive M&A | Private and confidential

4

Earlier stage investments are becoming more active Chinese market Corporate Venturing is growing rapidly

Venture capital and corporate venture

capital activities by region (USD billion)

260

18%

North America Asia Europe Others CAGR 15-18 (%)

160

12% 39%

18% 29%

12%

29%

Venture capital and corporate venture capital activities in China

Corporate Venturing Venture Capital

85%

80%

57%

48%

11%

15%

2015

2018

2015

Note: Referring to funding invested into companies headquartered in the region/country

Source: CBInsights, SCMP, Deloitte analysis

? 2019. For information, contact Deloitte China.

20% 2018

Disruptive M&A | Private and confidential

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