Merger Monday: Big deal developments spark hopes of M&A pick-up this autumn
Global deals valued at nearly $65bn (£49.5bn) cleared a series of major hurdles yesterday, amid hopes of a renewed drive in worldwide mergers and acquisitions next month.
US pharmaceutical company Pfizer agreed a $14bn deal for San Francisco-based Medivation, which specialises in cancer treatments. It came as a welcome boost to the pharma giant whose $160bn merger with Ireland-based Allergan was scuppered earlier this year by an American crackdown on tax inversion deals.
ChemChina announced that its $43bn takeover of Swiss seeds company Syngenta had been cleared by the Committee on Foreign Investment in the US. If completed, it will mark the biggest ever foreign takeover by a Chinese company.
No sign of summer slump as $65bn worth of deals bring the global M&A market to life
Read more: More M&A experts think Brexit vote could spark foreign interest in UK firms
Meanwhile, Canadian convenience store operator Alimentation Couche-Tard sealed a $4.4bn deal for Texas-based counterpart CST Brands.
And Japanese chipmaker Renesas Electronics is said to be lining up a bid in the region of $3bn for Intersil.
In the UK, the Singapore Exchange agreed terms on a smaller but iconic £87m deal for London’s Baltic Exchange.
Following a record-breaking 2015 for mergers and acquisitions (M&A) activity, in which more than $5 trillion of deals were announced, 2016 has been slower.
Experts believe there may be a fillip in activity in the autumn, both in the UK and globally.
Peter Gray, head of financial services at Cavendish Corporate Finance, told City A.M.: “As the fundamentals of the UK economy remain strong, we can expect the weakness in sterling to continue to fuel appetite from US, China and Japan, which will continue to be main sources of buyers of UK businesses.
“Those who predicted the demise of the M&A market following the Brexit vote may well have to eat their words.”
Read more: Why slashed interest rates could provide another M&A boost after Brexit
“We’re not going to get historic levels of M&A again this year, clearly. But we may see a pick-up in September,” Stephen Wilkinson, global head of M&A at law firm Herbert Smith Freehills, told City A.M.
“Boards often come back from their summer breaks with lots of ideas about how they move forward, and I wouldn’t be surprised if we see a pick-up again in September.”
So far this year, Dealogic has tracked just under 24,000 deals worth a total of $2.2 trillion, down from 27,000 worth $2.9 trillion during the same period last year.
Deal activity is thought to have been hit by uncertainty around the UK’s EU referendum, the US election, China’s economy and unrest in the Middle East around the world.
The UK has been among the nations worst hit, with 489 deals worth $95.6bn announced so far this year, down from 514 worth $153.9bn in the same period in 2015.
The biggest deal announced so far this year involving a UK company was the £24.3bn takeover of Cambridge-based chipmaker Arm by Japan’s SoftBank. This was thought to have been prompted, in part, by the falling value of the pound since the Brexit vote.