Global M&A volume in Jan highest since 2000

Swiss drugmaker Actelion's headquarters in Allschwil near Basel. For the first time since 2008, Europe topped North America on the list of target regions for M&As, as firms from Actelion to Italian eyewear-maker Luxottica Group agreed to be bought.
Swiss drugmaker Actelion's headquarters in Allschwil near Basel. For the first time since 2008, Europe topped North America on the list of target regions for M&As, as firms from Actelion to Italian eyewear-maker Luxottica Group agreed to be bought.PHOTO: AGENCE FRANCE-PRESSE

Firms rush to get deals done as US President's actions unsettle investors

LONDON • With pent-up demand from last year and the challenges of an unpredictable United States administration ahead, companies seeking to get deals done kicked off this year with a bang.

Global mergers and acquisitions (M&A) activity amounted to US$224 billion (S$316.6 billion) in January, the highest volume since 2000 in the first month of the year, according to data compiled by Bloomberg.

For the first time since 2008, Europe topped North America on the list of target regions, as firms from Swiss drugmaker Actelion to Italian eyewear-maker Luxottica Group agreed to be bought.

Pent-up demand from last year, when investors had to contend with volatile markets, and rising bond yields, which make debt financing for deals more expensive, have contributed to the surge, analysts say.

But this January, investors have received an additional incentive: Mr Donald Trump.

While some speculate the US President's appointment of a pro-business Cabinet signals a deal-friendly approach, others note his repeated objection to the mega-merger between AT&T and Time Warner as cause for concern.

"There might be a sense of 'Let's get these deals done and dusted before Trump really gets into a stride'," Mr Jasper Lawler, a market analyst at London Capital Group, said by phone.

RACE AGAINST TIME

There might be a sense of 'Let's get these deals done and dusted before Trump really gets into a stride'.

LONDON CAPITAL GROUP MARKET ANALYST JASPER LAWLER, on why global mergers and acquisitions activity is heating up.

"Stock markets are close to all-time highs, yields are slightly firmer and there is a general sense of confidence; at the same time, the Trump administration could be a bit more hostile to deals, if you go by some of the rhetoric in his campaign," he added.

Mr Trump's actions over the past week, including an executive order on immigration and the firing of acting attorney-general Sally Yates when she refused to defend it, have unnerved investors across markets.

His recent decisions have dimmed the enthusiasm that had gripped investors since his election, with the most popular trades showing signs of fading.

"There might be unpredictable action of the kind we've seen over the past few days concentrated in the M&A space," according to Mr Ken Odeluga, an analyst at brokerage firm City Index in London.

"It makes sense for companies to rush through M&A activity at this stage because at some point, the administration will catch up."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 02, 2017, with the headline 'Global M&A volume in Jan highest since 2000'. Print Edition | Subscribe