“The deal junkyard is getting crowded,” says Elizabeth Fournier on Bloomberg.com. In the past eight months, $3.2trn of deals have been announced worldwide, and 9%, worth $294bn, have fallen apart. The $160bn tie-up between Pfizer and Allergan, sunk by a clampdown on US tax inversions, is the main culprit.
Canadian Pacific abandoned its bid to buy Norfolk Southern Corp after five months of haggling. Norfolk insisted the offer was inadequate. China’s Anbang withdrew its $14bn bid for Starwood.
At this late stage of the cycle, prices are high, and competition is intense, so there is more scope for deals to fall apart at the last minute. But don’t expect a collapse in deals. Low borrowing costs and a lacklustre economic backdrop, which prompts firms to buy in growth rather than invest, aren’t going away in a hurry, says Time.com’s Rana Foroohar.
Still, the mergers and acquisitions (M&A) slowdown following 2015’s global record feels like one more indicator that this multi-year bull run may be getting a bit long in the tooth – especially when you consider that past M&A peaks have coincided with market peaks.