Firms bolder about M&A as number of big deals rises

PUBLISHED : Friday, 28 March, 2014, 3:28pm
UPDATED : Saturday, 29 March, 2014, 12:39am

A string of large transactions drove the value of global mergers and acquisitions (M&A) activity up by 54 per cent in the first quarter compared with the same period last year, reflecting greater deal-making confidence among chief executives.

The value of worldwide announced deals totalled US$710 billion in the first three months of the year, according to Thomson Reuters data, which includes competing bids for Time Warner Cable and French telecommunications firm SFR. Global M&A is up 35 per cent excluding these competing bids.

Almost half the M&A pot came from deals worth US$5 billion or more.

There have been several transformational deals, [with] some bold moves

The number of deals, however, dropped by 14 per cent. This means fewer but larger deals have been driving activity so far this year.

"There have been several transformational deals, and companies have made some bold and aggressive moves. I'm hopeful that we'll see more of this in 2014," said Hernan Cristerna, co-head of global M&A at JP Morgan.

Comcast trumped Charter Communications with a bid valuing Time Warner Cable at US$70.6 billion in enterprise value, the largest transaction in the works since January.

Earlier this year, Ireland-based Actavis, the world's second-largest maker of generic drugs, paid US$23.8 billion for US speciality pharmaceuticals firm Forest Laboratories, its largest acquisition.

Facebook also made its boldest M&A move, paying US$19.4 billion for its acquisition of mobile messaging services firm WhatsApp.

While the United States continues to stage most of the M&A action, with 51 per cent of the market by value of deals so far this year, Europe and the Asia-Pacific are gradually catching up, with 24 per cent and 16 per cent, respectively.

The Asia-Pacific region had the strongest start of the year on record, with announced deals worth US$113 billion and 1,751 transactions, according to Thomson Reuters data.

Morgan Stanley moved into the top position for worldwide M&A advisers during the first quarter, boosted by its role advising Japanese drinks firm Suntory on its US$16 billion acquisition of US bourbon maker Jim Beam.

"We are starting to see a slow but steady growth in large deals, which implies an increase in confidence," said Henrik Aslaksen, global head of M&A at Deutsche Bank.

"These have a big impact on the market but can skew the true picture. There is no M&A surge yet," he said, comparing current activity to levels before the global financial crisis.

Deals between US$1 billion and US$5 billion, which are a barometer for the health of the M&A market, are up 17.5 per cent, with 91 transactions so far this year.