Global M&A deals hit 7-year peak

Mergers and acquisitions deals volumes at a global level are at a seven-year peak.

Appetite for striking huge corporate deals is returning, as it has emerged that international mergers and acquisitions (M&A) deals are at their highest level for seven years.

The value of M&A deals around the world in the first half of 2014 stood at $1.75 trillion – an impressive 75 per cent increase on the same period last year, and the highest level in seven years. Yet the actual number of deals actually fell slightly, indicating a rise in the prices being set on target companies.

Across the main trading continents deal values rocketed – in Europe, $509 billion in deals has been announced, more than twice the figure recorded a year ago, while the US saw deals up nearly 75 per cent to $748.5 billion.

Meanwhile, Asia-Pacific deals soared by 85 per cent to $327.8 billion- the highest since Thomson Reuters started recording figures over three decades ago.

According to Reuters, corporate buyers were more willing to adopt hostile methods if targets were reluctant to sell, while many US companies in particular have sought to acquire foreign firms to lower their tax liabilities and access any cash held offshore.

Minimising tax obligations is believed to have been one of the goals behind pharmaceutical giant Pfizer’s attempt to buy AstraZeneca earlier this spring, though that deal eventually fell through when AstraZeneca’s board refused a final revised offer from its US rival.

Even without a Pfizer-AstraZeneca deal, health performed strongly overall. More than 18 per cent of the total deal volumes were in the healthcare sector, with the value more than trebling to $317.4 billion.

What’s more, Reuters says that whereas in previous M&A flurries cheap money has been used to saddle firms down with debt, cash-rich firms like Pfizer, Comcast and General Electric, which has just agreed a deal to buy French firm Alstom, are now leading the way.

“The consequence of this frenzy will be an increased focus on integration to avoid mistakes from the last boom, and also an increased focus on selling non-core assets before they become too orphaned,” Robin Johnson co-chair of cross-border M&A at Eversheds told International Business Times UK.