M&A Ends 2007 With a Bang

Deal Journal, WSJ.com, December 28, 2007:
Reports of the M&A market’s demise may have been greatly exaggerated.
Much has been made of the slowdown in deal making and the toll the credit crunch is taking on M&A, especially on leveraged buyouts. That perhaps has overshadowed this simple fact: The biggest deal making year in history is ending quite strongly. In fact, deal making continues to chug along at levels not often seen before.
Companies and private-equity firms struck $1.093 trillion worth of transactions in the fourth quarter, according to Dealogic. That would rank it as the second biggest quarter this year and the third largest quarter in the past 12. Even if you subtract BHP Billiton’s $149.2 billion offer for Rio Tinto, that figure stands at about $944 billion and ranks ahead of six quarters since the beginning of 2005.
December marked the third straight month to top $300 billion in deal volume, according to Dealogic.
Even the U.S., which was hardest hit by the credit crunch, began to show signs of coming to life in December. Led by sovereign wealth funds scooping up stakes in U.S. financial institutions, foreign buyers increasingly found the U.S. attractive.
U.S. deal volume hit $121 billion in the month, surpassing $100 billion for the first time since July, and down just 8.4% from December 2006, according to Dealogic. Meanwhile, acquisitions of U.S. firms by foreign buyers surged to $107.8 billion in the fourth quarter — the largest quarterly total in the past 12.
With private-equity players still on the sideline, corporate buyers are indeed filling the void. Not only did corporate deal volume reach $955 billion in the fourth quarter, its second highest level of the year (the second quarter, which marked the peak of the boom, ranks higher). It also accounted for 87% of all deal volume – its largest percentage of the past four quarters.