M&A in the healthcare sector has provided investment banks with one of the few opportunities to earn some much-needed fee income in the first quarter of 2009, according to a report
M&A in the healthcare sector has provided investment banks with one of the few opportunities to earn some much-needed fee income in the first quarter of 2009, according to a report by mergermarket.
By being retained to advise on the largest deals in 2009 – all in the healthcare sector –
Goldman Sachs, JPMorgan and Morgan Stanley reaffirmed their dominance at the top of mergermarket’s global M&A league tables when ranked according to value.
In the case of Morgan Stanley, which ranks third so far in 2009, the firm has succeeded in reversing a major slump in 2008, when it sank to seventh globally, the report reveals.
With the credit crisis taking its toll on the positions of global investment banks like Lehman, Citigroup and Merrill Lynch, M&A boutiques such as Greenhill and Evercore Partners have catapulted themselves into the top ranks.
Similarly, those banks which took advantage of the credit crisis to expand their franchise, such as Barclays (up from 29th to sixth in the global tables by value) and Nomura (up from 24th place to second in Asian league tables), have also made progress.
In addition to being largely focused on the healthcare sector, much of the M&A activity involved US companies (55 per cent by value compared to 34 per cent for 2008).
mergermarket says Asian activity levels are particularly low by comparison, with China’s recent decision to block Coke’s acquisition of a mid-sized Chinese juice company on anti-trust grounds likely to ensure that this does not change.
Looking forward, US M&A looks set to continue to dominate, according to the report.
The technology sector, with large deals in the pipeline including that involving IBM and Sun Microsystems, is expected to follow healthcare as the next happy hunting ground. In both healthcare and technology the most appealing targets are based in the US.
However, mergermarket says it remains to be seen whether overseas acquirers will have what it takes to step up and act as consolidators in what is widely viewed as a once-in-a-lifetime opportunity to acquire cheap targets.
So far this year global M&A is down, with total values showing a decrease of 27 per cent from the previous quarter and 40 per cent when compared with Q1 2008. By volume, the drop is even more dramatic: 43.7 per cent fewer deals have been announced so far in Q1 2009 than in Q4 2008, and 64 per cent fewer than in Q1 2008.
