A record year for global M&A
This year will go down as the best on record for global mergers and acquisitions (M&A) with $4.6trn-worth of deals.
This year will go down as the best on record for global mergers and acquisitions (M&A). There have been $4.6trn-worth of deals, with US companies leading the charge they accounted for an unprecedented $2.3trn. Asia had a record year too. The year also saw the most mega-deals, defined as mergers worth over $5bn, in history: 137. Eye-catching examples included Pfizer's $160bn pharma tie-up with Allergan, and the $106bn brewing merger of Anheuser-Busch InBev and SABMiller.
What the commentators said
Financing is cheaper than in 2007, noted the FT, with the benchmark US ten-year Treasury yield just over 2% today, less than half its 2007 level. American firms also have an extra trillion of cash on their balance sheets. A greater proportion of deals than last time are being financed with the buyers' equity instead of debt, suggesting less exuberance than in 2007.
However long it goes on, however, it seems likely to end the same way.The mega-deals should be an especially stark reminder that acquirers tend to overpay and destroy value, as Bloomberg.com's Gadfly blog pointed out. The only people who do well out of M&A are bankers. Banks have generated over $26bn in fees from the global spree, the most since 2008. As Warren Buffett jokes, M&A has "prompted the saying that fees too often lead to transactions rather than transactions leading to fees".
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
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
-
Nationwide hikes FlexPlus current account fee by £5 a month – is it worth it?
Nationwide’s FlexPlus current account is a favourite with customers, but it’s worth checking whether you are taking advantage of the perks after the monthly fee went from £13 to £18
By Katie Williams Published
-
Santander launches online pension that offers up to £1,000 cashback
Santander's self-invested personal pension offers customers cashback of up to £1,000 if they invest before 25 April next year - here is everything you need to know
By Chris Newlands Published