Friday 13th - not unlucky for some in M&A

It remains to be seen if the last two weeks is the usual autumn deal season starting early or just an Indian summer.

On Friday 13th August I posted a blog about the low levels of deal numbers being seen across Europe – but in my defence I did remark about the high value of deals involving UK targets. Sod’s law being what it is, you can guarantee when you make a statement like that the opposite happens and it duly has.

The last two weeks have seen 16 deals announced that are over US$1bn each and they account for a total aggregated dollar value of over $81bn. To put this into context, the $64bn worth of ‘mega deals’ (aka $1bn+ deals) announced last week was the highest value of such deals announced in a single week since the week beginning 8th March 2009, where the mega deals announced that week totaled $95bn.

The deals announced in the last two weeks have been diverse in terms of geographical location and in terms of industry sector of the target company. However, the largest deal by far is the hostile bid for Potash by BHP, accounting for over half of the total value of announced $1bn deals. Interestingly there is a significant private equity deal within the last two weeks, the $4.7bn acquisition of Dynergy Inc by the Blackstone Group as announced on the 13th August after I had written my blog!!

While I am personally still not convinced that we have turned the corner and are on the road to full economic recovery it’s very clear that some companies that have been sitting on cash reserves are now looking to execute deals which they may have delayed due to the whole economic maelstrom in the last two years. The potential buyers out there not only appear to be corporates with strong balance sheets but also PE companies which have unspent capital which will need to be returned to investors if not utilised.

It remains to be seen if the last two weeks was the usual autumn deal season starting early or just an Indian summer.

Filed under: dealmaking, Investors, M&A, PE, takeover, crop