Global M&A Grows to Post-Crisis Record

Expansion comes amid higher skepticism of cross-border deals.

Like ripening summer tomatoes, corporate mergers are swelling, with the year’s first half setting a global post-crisis record of $1.94 trillion for 8,560 deals thus far, according to the Mergermarket research group.

Led by a monster pharma takeover, Japan’s Takeda’s $79.7 billion planned acquisition of Ireland’s Shire comes amid increased scrutiny of cross-border deals. Earlier this year, President Donald Trump squelched a major transaction in the chip field, ending the quest of Singapore’s Broadcom for Qualcomm, a US company. The prospect of a trade war was a headwind the M&A market has faced thus far this year.

As a result, Mergermarket noted, for the first half, only 38.2% of M&A value was cross-border, a 6 perentage point drop versus 2017’s first six months.

In the US, which makes up about half of world deal value, the pricetag of the mergers escalated, even as the number of tie-ups shrank. As the researchers explained it: “Various established industry giants, under fire from disruptors Amazon and Netflix, continued to demonstrate a willingness to pay high prices for the most valuable targets on the market.”

So for 2018’s first half, the average value for disclosed deals climbed 51.4% to $736.7 million from $486.5 million in last year’s comparable period, and 24.8% from $590.2 million in 2017’s second half.

On the American M&A front, the biggest deal is insurer Cigna’s $67.9 billion bid for Express Scripts, the pharmacy benefit manager. No. 2 is the planned combination of T-Mobile and Sprint, the third- and fourth-largest US wireless carriers.

Tags: , ,