The more than US$52 billion worth of deals announced on Monday morning made it the busiest “merger Monday” this year, as two large US corporate takeovers underscored increasing chief executive interest in pursuing transformational transactions to boost growth and cut costs.
DISH Network Corp, the No. 2 US satellite television provider, made a US$25.5 billion bid for Sprint Nextel Corp, challenging the proposed acquisition of Sprint by Japan’s Softbank Corp, while Thermo Fisher Scientific Inc struck a US$13.6 billion deal to buy Life Technologies Corp.
Meanwhile, US investment firm Royalty Pharma sweetened its bid for Irish drugmaker Elan Corp PLC to as much as US$7.3 billion, formalizing its initial approach.
The day’s slew of announced transactions brought the value of global mergers and acquisitions so far this year to US$650.2 billion, up 14.5 percent from US$568.1 billion during the same period last year, according to Thomson Reuters data.
US companies accounted for more than half of that activity, with US$331 billion of deals through Monday, up from the 32 percent share in the same period last year, when deal volumes in the country totaled US$181.9 billion.
“If you’re a well-capitalized company, one that has cash and access to capital, and if you have strategic imperatives, now is going to be looked at as a very compelling time to acquire,” said Paul Parker, head of global corporate finance and mergers and acquisitions at Barclays PLC. “Volatility has come down meaningfully, interest rates are low, corporate cash levels are high and dilutive, just sitting unproductively on balance sheets, and there is pent-up strategic demand. This is why we are seeing industry and company-transforming deals.”
The first four months of the year already saw several large corporate deals, including the US$23.2 billion takeover of ketchup maker H.J. Heinz Co by Warren Buffett’s Berkshire Hathaway Inc and Brazilian private equity firm 3G Capital.
Other large deals included the US$24.4 billion bid to take Dell Inc private by founder Michael Dell and buyout firm Silver Lake Partners, as well as the merger of US Airways Group Inc and AMR Corp, the bankrupt parent of American Airlines.
“There is increasing confidence in the United States as a safe haven and as a stable place to invest,” Parker said.
“CEOs here [in the US] have more visibility to their own companies’ futures, as well as the futures of the targets they’re looking at in this market,” he said, adding that the political and economic uncertainties in Europe and Asia continue to be an overhang.
European deal activity is down 23 percent to US$138.4 billion, while the Asia-Pacific region saw a 10 percent decline in deal volumes to US$91.4 billion, Thomson Reuters data showed.