Buyouts are having a banner year.
The volume of acquisitions announced this year breaks the record set in 2000, as the total value reached an all-time high last week, even before a slew of takeover announcements were made on Monday that pushed it even higher.
As of Monday, the total value of announced acquisitions worldwide reached US$3.46 trillion for the year, exceeding the US$3.33 trillion level of announced deals reached in 2000, according to Dealogic.
"This is merger mania," Standard & Poor's senior index analyst Howard Silverblatt said.
In comparison, the GDP of Europe's largest economy, Germany, came in at US$2.48 trillion last year, according to the latest figures in the CIA Factbook.
Focus on US
Data from Dealogic shows the number of deals announced this year to be 28,312, lower than the 31,019 in 2000. The US remains the center of deal activity, accounting for 36 percent, or US$1.22 trillion, this year, down from 46 percent, or US$1.53 trillion, in 2000, according to Dealogic data from last week.
The intense acquisition activity is driven by the surplus of cash held by private equity firms and public companies alike, as well as interest rates that are at historic lows and the willingness of banks to provide financing. If current economic conditions persist, the whiplash pace of acquisition activity may go on.
An interesting aspect of this wave of acquisitions is the growing number of public companies that are being taken private, said Bob Filek, a Transaction Services partner at PriceWaterhouseCoopers who specializes in global M&A. Filek said it would take a decline in overall credit quality and greater concern over debt to put a damper on M&A deals.
On Sunday, the Blackstone private equity group agreed to buy Equity Office Properties Trust, the nation's largest publicly traded office-building owner and manager, for US$19 billion. Minus debt, the deal would be the third-largest leveraged buyout on record -- if it goes through -- behind the US$25.1 billion paid for RJR Nabisco in 1988 and the recent US$21.2 billion deal to take HCA Inc private.
Other deals announced on Sunday and Monday include: Freeport-McMoRan will acquire Phelps Dodge for US$25.9 billion in cash and stock; brokerage and financial services firm Charles Schwab Corp said it will sell its wealth-management subsidiary US Trust to Bank of America Corp. for US$3.3 billion in cash, and Canadian banking company TD Bank Financial Group said it would acquire the portion of TD Banknorth Inc it does not already own for about US$3.2 billion.
Peak
Anthony Sabino, an associate professor of business at St. John's University in New York, said acquisitions were likely to continue at a rapid pace well into next year, but have likely reached a crescendo this year.
"It's common sense, economic history and the basic rules of life that grandma taught you when you were a kid, that there are not enough good deals left," Sabino said. "There are too many big deals going on, the question has to be asked what good deals are left. And if there are not that many good deals left, then what is left? What's left is bad deals."
Of the top 10 biggest deals ever, eight have been announced since the beginning of this year.
After the HCA and Equity Office deals, the next largest acquisitions announced this year, minus debt, were: Clear Channel Communications Inc (US$18.8 billion), Free-scale Semiconductor Inc (US$17.7 billion), Harrah's Entertainment Inc (US$15.4 billion), Kinder Morgan Inc (US$14.6 billion), Univision Communications Inc (US$12.1 billion) and Albertson's Inc (US$11 billion), Thomson Financial said.
Meanwhile, in a speech on Monday, Treasury Secretary Henry Paulson said heightened regulation was a factor driving many public companies to revert to private status, facilitated by growing pools of private capital.
"This is occurring in record numbers, at record volumes, and, as a percentage of overall public company M&A activity, is approaching levels we have not seen in almost 20 years," he said.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS