Merger and acquisition activity looks poised for a rebound. According to research by Dealogic, global M&A volume has increased 47% in the first half of 2004 compared to the first half of 2003. The value of global completed transactions for 2004 to date is $941.8bn. Despite the ongoing uncertainties facing industries around the world, the M&A market seems to be well equipped to face the challenges and changes within the economic environment. The figures for Europe, Middle East and Africa (EMEA) regions mirror a similar trend, boasting an increase of 13% in M&A value, but a decrease of 2% in revenue. The Asia-Pacific target deal value increased 29% to $156.2bn. The US tops the M&A list with deals worth $467.2bn; a huge increase of 97%.
The figures are not completely representative. The numbers have been heavily influenced by the inclusion of a few very big deals, including the tie-up between Sanofi-Synthelabo and Aventis for $74bn, the JP Morgan Chase and Bank One deal, worth $58bn, and the Cingular and AT&T get-together, valued at $41bn.
The largest pending UK transaction is currently Royal Bank of Scotland’s bid for Charter One Financial in the US for $10bn which was announced in May.
Elsewhere Goldman Sachs tops the latest M&A global and European rankings, with Morgan Stanley close behind, jumping from its tenth place ranking in 2003 to third place this year. Morgan Stanley?s success can be attributed to its involvement in a number of large transactions this year, including the Sanofi-Synthelabo and Aventis deal, and the Japanese pharmaceutical merger between Yamanouchi Pharmaceutical and Fujisawa Pharmaceutical, where it acted as sole acquirer advisor.
According to the Ernst & Young Mergers & Acquisitions Index for 2004,
?The 2004 year represents strong growth for M&A activity, leveraging the platform that has been set by the increased activity in the previous 18 months. Greater offshore participation will occur due to the global economy strengthening. The major beneficiaries of this strong growth could well be those in the IT and telecommunications, financial services, agriculture, food and beverage, health, packaging and retail sectors.
?As the M&A market continues to gain momentum, we see the private equity funds stepping up to compete with trade buyers, resulting in further growth through more deal activity. Private equity funds are cashed up and, having exited a number of ageing investments and raised new capital, positioned as a buying force to compete in the M&A market.?
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