Merger and acquisition deal value and volume fell 27 per cent in 2009, but the end of the year showed signs that the recession is coming to an end and M&A is starting to pick up, according to a report by mergermarket.
The last quarter of 2009 was the best quarter in value terms since the third quarter of 2008.
With 2,523 announced deals valued at USD626.8bn, the quarter saw an increase of 35 per cent over the same period in 2008 and 90 per cent compared to the previous quarter.
The quarter was also the biggest by value ever for Asian deals at USD177.1bn, 26 per cent more than the previous high of USD141bn during the fourth quarter of 2006.
Despite frozen debt markets and reluctance by corporates to make deals, 2009 saw more mega deals than 2008 – seven deals valued at USD40bn+ compared to three in
2008.
According to mergermarket, 2009 did set a new record with numbers and values of insolvency deals eclipsing even the peaks of 2002. 2009 offered opportunistic buyers with the available capital the chance to take advantage of stressed and distressed companies, giving rise to a staggering 370 per cent increase in the value of insolvency deals since 2008.
The USD95.5bn-worth of insolvency deals in 2009 is just USD150m short of a combined total of USD95.65bn-worth of insolvency deals over the previous four years. Turning to deal volume, the 543 bankruptcy deals in 2009 equals the 543 deals recorded over the previous three years combined. They include high profile “363” sales in the automotive sector, such as the sale of the bulk of General Motors assets as well as the sale of certain Chrysler assets.
Though there is still uncertainty in the markets, there are signs that the momentum will carry into 2010. A resurgence in financial sponsor activity, corporates sitting on record levels of cash, and a thawing credit market, could signal a good year for M&A deal makers.
Large pharmaceutical companies will be on the look out for targets that can help replenish their drug development pipelines, says mergermarket. The mega deals seen in 2009 could lead to divestitures required to seal these transactions as regulators scrutinize the announced tie-ups. On the consumer front, Kraft Foods continues to struggle to take over Cadbury and could turn its attention to the likes of Sara Lee or United Biscuits should its offer for the British chocolate company fail.
As anticipated, Morgan Stanley claimed top spot in the global value tables for 2009, with deals valuing a total of USD585.9bn, compared with Goldman Sachs’ USD548.6bn. By volume, Goldman Sachs took the top spot with 244 deals, a 13 deal lead over Morgan Stanley’s 231.
The report says the dynamic duo of the M&A world have benefited from advising clients across the globe on the majority of the largest transactions in sectors as far apart as Australian commodities and American healthcare and technology.
JPMorgan takes third place in both the value and volume tables with its ranking due primarily to its role advising on US takeovers, most recently advising ExxonMobil on its USD40.4bn takeover of XTO Energy.
