The best kind of M&A deal

“If, as investment bankers like to say, the best deals are the ones clients don’t do, then corporate chieftains have been on a roll,” says Jeffrey Goldfarb on BreakingViews.com. The flipside of a mergers and acquisitions (M&A) boom is a jump in deals that get called off or thwarted by regulators.

Last year, global M&A was worth a record $4.4trn. Companies had rebuilt their cash piles and been encouraged by the gradual economic and market recovery, while cheap credit encouraged firms to borrow to expand. However, $750bn of takeovers proposed last year have been abandoned, notes Goldfarb, while two major tie-ups that could be blocked by regulators are the beer mega-merger, Anheuser-Busch InBev’s pursuit of SABMiller, and Dow Chemical’s $68bn deal with DuPont.

The 2015 tally of abandoned deals could ultimately hit $1trn. In the past 20 years, the annual sum has averaged less than half that figure; the previous spikes were in 2007 and 1999, the takeover frenzy at the height of the dotcom bubble. Still, “failures can be a blessing. Ask Barclays about ABN Amro.”


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