Wheels come off M&A deals

The torpedoed tie-up between Pfizer and Allergan is the main culprit behind a rise in failed mergers and acquisitions deals.

"The deal junkyard is getting crowded," says Elizabeth Fournier on Bloomberg.com. In the past eight months, $3.2trn of deals have been announced worldwide, and 9%, worth $294bn, have fallen apart. The $160bn tie-up between Pfizer and Allergan, sunk by a clampdown on US tax inversions, is the main culprit.

Canadian Pacific abandoned its bid to buy Norfolk Southern Corp after five months of haggling. Norfolk insisted the offer was inadequate. China's Anbang withdrew its $14bn bid for Starwood.

At this late stage of the cycle, prices are high, and competition is intense, so there is more scope for deals to fall apart at the last minute. But don't expect a collapse in deals. Low borrowing costs and a lacklustre economic backdrop, which prompts firms to buy in growth rather than invest, aren't going away in a hurry, says Time.com's Rana Foroohar.

Still, the mergers and acquisitions (M&A) slowdown following 2015's global record feels like one more indicator that this multi-year bull run may be getting a bit long in the tooth especially when you consider that past M&A peaks have coincided with market peaks.

Recommended

The charts that matter: bond yields slip while bitcoin tops $60,000
Economy

The charts that matter: bond yields slip while bitcoin tops $60,000

Cryptocurrency bitcoin soared to over $60,000 this week, while government bond yields fell back. Here’s how that has affected the charts that matter m…
16 Oct 2021
Whistleblower allegations – where now for Facebook?
Tech stocks

Whistleblower allegations – where now for Facebook?

The social-media giant has come in for some fierce criticism following revelations from a former employee. Just how much damage has been done?
16 Oct 2021
When will supply chains sort themselves out and what might that mean for inflation?
Inflation

When will supply chains sort themselves out and what might that mean for inflation?

Right now, congestion in global supply chains is driving inflation higher. At some point, that will sort itself out. So will that mean an end to high …
15 Oct 2021
From an age of plenty to an age of shortage
Economy

From an age of plenty to an age of shortage

We have emerged from the pandemic into a world where supply can’t meet demand, driving prices up. Merryn Somerset Webb looks at what's going on.
15 Oct 2021

Most Popular

Inflation is still one of the biggest threats to your personal finances
Investment strategy

Inflation is still one of the biggest threats to your personal finances

Central bankers and economists insist inflation will be gone by next year. We're not so sure, says Merryn Somerset Webb. So if you haven’t started to …
1 Oct 2021
How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021
How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021