- The global activity of mergers and acquisitions accelerates to record levels.
- With 14 ‘megadeals’ in excess of 10 billion dollars in the business services, energy, construction, real estate, and consumer sectors, the figures are notable for their breadth in sectors and geographies.
- The key question for investors is whether this merger and acquisition boom is a short-term anomaly or something more substantial and sustainable
After a delay of 18 months due to antitrust objections raised by the US Department of Justice. In the US, many believe that the $ 85 billion acquisition of the Time Warner media group by telecommunications giant AT & T in June will boost important agreements in the telecommunications and media sectors in the coming months.
But if the loss of definition in the line that differentiates traditional media and technology is likely to drive a lot of other important content and distribution agreements, the two sectors are not the only ones that see an increase in corporate activity. the experts of UBS AM.
According to the Global and Regional M & A 2018 report carried out in the first half by Mergermarket, the value of mergers and acquisitions worldwide in the first three months of the year was 890,600 million dollars, 18% more year-on-year and the beginning more solid year since the merger market records began in 2001.
With 14 ‘megadeals’ in excess of 10 billion dollars in the business services, energy, construction, real estate, and consumer sectors, the figures are notable for their breadth in sectors and geographies, as well as for their scale. The most recent news flows suggest that M & G’s activity has not been altered since the end of the first semester
The key question for investors is whether this merger and acquisition boom is a short-term anomaly or something more substantial and sustainable that will influence markets on a significant horizon. UBS AM believes that is the latter.
“In truth, the argument for increasing global mergers and acquisitions over the next one or two years was convincing even before the AT & T operation by Time Warner. Backed by a perfect storm of strong global growth, cash-rich corporate balance sheets, low borrowing costs, high levels of corporate confidence and structural change led by technology in all industries, 2018 was already emerging as a record year of corporate activity remember the analysts of the manager.
The return of the ‘animal spirits’
With global growth rates comfortably above trend and the economic momentum of the United States particularly robust, the context of demand certainly seems conducive to the creation of agreements and, in the opinion of UBS AM, is likely to remain so.
“Corporate trust in this environment remains high. According to the optimization index of small companies of NFIB in the USA. UU., The confidence is at its highest level in 34 years, helped by the historical maximums in some components of the index, including the expectations of commercial expansion and positive profit trends “, the point from the manager.
In a recent survey by global consultancy EY, (Global Capital Confidence Barometer, April 2018), about 86% of corporate and private equity respondents said they expected the global merger and acquisition market to improve over the next 12 months.
“Strong corporate profits, particularly in the United States, and the belief that credit availability will remain strong are the key ingredients here, along with the return of animal spirits in American companies. Doing business clearly involves risk. Therefore, we see the current high levels of corporate optimism as an important support for mergers and acquisitions “, conclude from UBS AM.