M&A hits an eight-year high

A flurry of deals early this week has given the global mergers and acquisitions (M&A) market its strongest start to the year since 2007.

A flurry of deals early this week has given the global mergers and acquisitions (M&A) market its strongest start to the year since 2007. The value of worldwide M&A in the first three months of 2015 jumped by over a fifth to $811bn.

Health-care groups led the way, with America's largest health insurer, United Health, paying almost $13bn for pharmacy-benefits manager Catamaran, and Israeli drugmaker Teva spent $3.2bn on Auspex. US ketchup maker Heinz's $46bn takeover of foods group Kraft was the biggest deal of the quarter.

What the commentators said

Given that the recovery has been historically tepid, a key priority for many companies is "achieving growth in a low-growth environment", said Deutsche Bank's Paul Stefanick. Buying growth is especially important for Big Pharma, where many firms are seeing major drugs come off patent.

Companies are doing deals to acquire new drugs and investors have remained supportive even if valuations have looked high. An "eat or be eaten" mentality pervades the sector.

Energy could be next: lower oil prices have made firms vulnerable to being scooped up. And look out for more deals in Europe, which only accounted for $168bn of activity in the first quarter. The cheap euro will entice foreign buyers, reckoned JPMorgan's Hernan Cristerna.

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