After a subdued few years following the financial crisis, mergers and acquisitions (M&A) activity has returned with a vengeance. Last Monday saw $100bn worth of takeovers announced worldwide, the strongest start to the year since 2000.
Among the most eye-catching deals were Japan's Suntory paying $16bn for US spirit maker Beam. US cable operator Charter's $61bn bid for its rival Time Warner was rebuffed; a tie-up would constitute the third-largest deal since the financial crisis.
Google scooped up Nest Labs, a maker of smoke detectors and thermostats, for $3.2bn. Britain's Amec paid $3.2bn for US-listed Foster Wheeler the biggest British purchase of an American construction group on record.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
What the commentators said
Companies have worked off debt and have plenty of cash, while interest rates remain extremely low, making it easy to raise debt. Bank lending has recovered and as the economic rebound has strengthened, companies' shaky confidence in consumer demand a reason they have sat on their cash so far has strengthened.
Tech sector valuations are always "astronomical", said The Daily Telegraph, but Google's Nest purchase worth 21 times sales is "surely the most anyonewill ever pay for a thermostat company". No wonder. Nest's thermostats connect to your smartphone and learn your movements and habits in order to conserve energy.
The theme here is the internet of things', said Robert Cyran on Breakingviews: consumers communicating with, and controlling, their products remotely. There is huge potential.
A vending machine "that tells its owners precisely what needs to be refilled, and when, means fewer service calls and more fulfilled customers.Imagine how this extra information and automation can affect the whole supply chain of the economy." Google is trying to gain a foothold in the tech sector's next big thing.
-
Rachel Reeves delivers Spending Review: what does it mean for your money?Chancellor Rachel Reeves’s Spending Review will see some departments’ budgets rise, but others won’t be quite as lucky. We look at what has been announced, and what it could mean for your money.
-
Divorce financial settlement fights surge – why it pays to agree terms earlyLawyers expect more court battles as tax rises and sharp falls in asset values make divorcing financially more difficult.
