Global M&A activities grew in the first three months of the year by 23% compared to the same period last year, up to USD 804.5bn compared to USD 655.8bn. The Dealogic data show that the size of individual M&A deals is expanding, while total number transactions are on the decline. It looks like CEOs are spending larger, and more willing than they have been to do giant-sized deals.
According to The Deal Pipeline, Comcast Corp.’s USD 67 billion bid for Time Warner Cable puts into the shadow last year’s “blockbuster” takeover of HJ Heinz (at USD28 billion). Strategic buyers have led the way in the first quarter this year, outspending private equity players, it said. There are fewer PE deals in the first quarter and they are smaller, too.
A desire to boost sales and market share in the face of stalling organic growth is causing some strategics to pay a higher premium for a fast-growing company that will give them an edge on competition, as was the case with Facebook’s WhatsApp acquisition, say analysts quoted in the article. As for PE, there are “plenty of potential targets”, especially in rivals’ portfolios. According to the research from Preqin, cited in the article, there are more than 4,000 in the US alone, companies acquired between 2006 and 2011 that may be ready to exit.
One last data point from the latest summary is that this past quarter was the “highest quarter on record” for the Telecoms sector. It is not clear to us if Dealogic’s records extend back in time to M&A frenzy that took place globally during the tech bubble days of ’99.. (Image source: Dealogic)