IBJNews

Megadeals drive torrid pace for M&A activity

Bloomberg News
April 29, 2014
Back to TopCommentsE-mailPrintBookmark and Share

The value of corporate takeovers announced in 2014 hit the $1 trillion mark Monday, reaching that level at the fastest pace in seven years.

That threshold was crossed 54 days earlier than in 2013, after more than $300 billion in purchases were announced by companies from Eli Lilly and Co. to Valeant Pharmaceuticals International Inc. to Alibaba Group Holding Ltd. in April, data compiled by Bloomberg show. The total excludes another $175 billion in proposals by Pfizer Inc., Mylan Inc. and others that have been rebuffed or are still awaiting final agreements.

CEOs, with more than $4 trillion in cash on company balance sheets globally, have gone from being wary of making big deals to facing pressure to strike deals or be beat to opportunities by their major rivals, said Michael Shaoul at Marketfield Asset Management LLC.

“Literally this past week we maybe just entered an M&A boom,” said Shaoul, who oversees more than $20 billion as CEO of Marketfield in New York. “Management teams are starting to build this mentality that they’re going to be a buyer or be bought. It puts pressure on everybody to think about who they could be buying.”

If dealmaking continued at April’s rate for the rest of the year, 2014 would see almost $4 trillion of deals announced, making it the second most active year for M&A ever, behind 2007, data compiled by Bloomberg show.

Deals continue

There are more to come this month. Merck & Co. is close to picking the winner of an auction of its consumer-products business, while Alstom SA—the French maker of power plants and trains that has received offers for its energy business from both General Electric Co. and Siemens AG—says it will make an announcement this week.

That the $1 trillion figure was hit in April this year, compared with June last year, is owed largely to the drug industry, which has accounted for nearly one-third of April’s deal announcements. Those companies could pressure rivals to strike their own takeovers or risk missing out as the industry recalibrates, said Mark Lubkeman, a senior partner at the Boston Consulting Group.

A three-way deal that will have Novartis AG, GlaxoSmithKline Plc and Indianapolis-based Lilly swapping assets, for example, will give other drugmakers the courage to think about creative ways to do M&A, he said.

‘Get busy’

“There’s a real imperative for management teams to think expansively about value-creation and to get busy.”

Even the deals that aren’t getting off the starting block highlight a change in thinking by chief executives whose confidence in economic growth has turned a corner. Pfizer’s proposal to acquire AstraZeneca for about $98.7 billion, which was rejected Monday by the British drugmaker, would rank as the industry’s biggest-ever takeover.

Barrick Gold Corp. and Newmont Mining Corp. called off merger talks that might’ve led to the largest mining-industry transaction since Glencore and Xstrata Ltd. merged in 2012, data compiled by Bloomberg show.

“Mega deals are opportunistic. Opportunistic deals are born out of confidence,” said Richard Jeanneret, Americas vice chair of transaction advisory services at Ernst & Young LLP. “CEOs are starting to pull the trigger on bigger bets now that they are feeling more confident about the stability in Washington and the stronger U.S. economy.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

  4. Woohoo! We're #200!!! Absolutely disgusting. Bring on the congestion. Indianapolis NEEDS it.

  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

ADVERTISEMENT