Corporate mergers hit highest level since just before the Great Recession
Global merger and acquisition activity in the first half of 2015 hit levels not seen since the first half of 2007, according to data released this morning by Thomson Reuters. Everything worked out fine after that… right?
Overall, nearly 20,500 worldwide M&A transactions were announced in the first half of 2015, valued at $2.2 trillion. That included a whopping $1 trillion of U.S. deal activity — a 60% bump over the first half of 2014, and an all-time high. Asia-Pacific M&A activity also reached record levels, with nearly $576 billion in value.
Big deals were a major driver of the increases, as there were 62 transactions valued at $5 billion or more. This included Royal Dutch Shell (RDSA) agreeing to buy BG Group (BRGYY) for $81 billion, Charter Communications (CHTR) agreeing to buy Time Warner Cable (TWC) for $78 billion and Energy Transfer Equity (ETE) reaching a $70 billion deal for The William Cos. (WMB).
For acquisitions of publicly-traded companies, the average price premium to the 4-week stock price was 25.9% globally, and 32.8% for U.S. targets. The highest average premiums for global deals were in healthcare (32.6%) and retail (27.5%), while those rankings were flipped in the U.S. where retail (50.2%) topped healthcare (45.2%).
There was $260.8 billion of private equity deal activity in the U.S. during the first half, which nearly doubled the $134.8 billion tally from H1 2014. Globally, private equity activity climbed from $277.6 billion in H1 2014 to $413 billion in H1 2015, while its percentage of the total M&A pie also grew (from 16% to 18.4%).
Goldman Sachs (GS) retained its top spot among financial sponsors on M&A, while Morgan Stanley (MS) jumped from third to second. J.P. Morgan Chase (JPM) moved up from sixth to third, while former #2 Bank of America Merrill Lynch (BAC) fell into fourth.
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