Friday, January 29, 2010

Brrrr. M&A Volume Still Caught in the Deep Freeze

WSJ, Deal Journal, Jan. 29, 2010:
Where is that M&A recovery?
Global deal volume through Jan. 28 is down 17% from the year-earlier month. And the U.S. was the worst performing region, down 72% and on par with the lows of last summer, according to Dealogic.
True, the year-earlier month included Pfizer’s $68 billion purchase of Wyeth, accounting for 31% of that month’s volume. Still, wasn’t 2010 supposed to be the year the deal market began its comeback? So what does this mean?
As Deal Journal has said before, the deal market is unlikely to come roaring back. Instead, the M&A market should show a “gentle recovery” in 2010. Sure, there are plenty of positive signs: Many corporate buyers are sitting on hordes of cash; the credit markets have improved, and banks are lending again for M&A, albeit selectively. Also, private equity should be more active as both buyers and sellers, and, perhaps more importantly, corporate executives are increasingly considering M&A.
Still, there is one large caveat: Deal activity will go the way of economy–both on the upside and downside.
So what will the M&A market look like this year? Probably a bit like 2004, according to a Robert W. Baird study. That was the year Cingular snagged AT&T Wireless, J.P. Morgan bought Bank One and BofA scooped up Fleet.
Anyway, here are some tidbits from Dealogic’s monthly M&A data:
The Latin American and Caribbean deal market has been the hottest, up 573%, thanks to the America Movil’s acquisition of Carso Global and Heineken’s purchase of FEMSA.
Overall, M&A activity in emerging markets is up 170%.
Credit Suisse Group stands atop the global league tables; Citigroup is atop the U.S. rankings.
Energy investment bank Tudor, Pickering Holt & Co. sits third in the U.S. league tables and sixth world-wide. It advised on Williams Cos.’s deal to merge two of its natural-gas pipeline and energy-processing affiliates.
The value of announced deals involving Chinese targets is up 93%.
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