Deals worth $1.83trn were agreed worldwide in the first half of 2014. That's up 41% on the same time last year, and it's the busiest first half for mergers and acquisitions (M&A) seen since the height of the credit bubble in 2007.
The boom looks set to continue. There are pockets of irrational exuberance' drugmaker Merck offered to buy a biotech firm last month at 240% above its market value, for instance but the market doesn't look especially frothy yet. Alistair Gunn of Jupiter Asset Management notes that companiesaren't overextending themselves asthey were at the top of the marketin 2007.
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Back then, companiestypically borrowed too much cashand spent it on their targets. Today,they tend to use their own stock, or a mixture of stock and cash. Meanwhile, M&A represents only a small proportion of the total value of global stocks, compared to previous peaks, says Andrew Milligan of Standard Life. At the tops in 2000 and 2007, M&A comprised 10% and 6% of the combined value of global stocks respectively. Now the figure is under 2%.
The ongoing revival will reinforce, and be reinforced by, rising markets, says Authers in the FT. "Bid speculation helps raise the price of potential targets, whilethe aura of excitement and success around the acquirers helps ensure that their prices do not suffer as a result."Of course, in the long run, M&A is "a great process for creating fees for bankers, and for destroying the valueheld by shareholders". But expect the boom to continue for now.
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Nationwide promises to protect all its branches from closures until at least 2030The building society has extended its pledge to keep all high street Nationwide and Virgin Money branches open, now until at least 2030.
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Could dividend tax nearly double in the Budget?Self-employed directors and investors, including pensioners, who get an income from company shares would be hit if the rumoured move to hike dividend tax goes ahead.
