Merger boom shows no sign of slowing, on track for record year

October 05 00:48 2015

Stocks may be down but the party in corporate mergers isn’t ready to end — and still may hit record levels this year. Activity during the first nine months suggests corporate mergers and acquisitions are on track to reach an estimated $3.83 trillion by the end of the year, according to research firm Mergermarket. That would be 4.5% higher than the previous peak of of $3.66 trillion reached in 2007, before the financial crisis ended the party, Mergermarket said in a new report.635588057797852985-EPA-USA-NEW-YORK-STOCK-EXCHANGE-70583997

Meanwhile, there’s no sign that recent stock volatility or fears of a slowdown in China will dampen the good times — at least not yet, experts say. “M&A is typically a long-term strategic decision that is not affected by short-term market volatility,” says Peter Tague, co-head of global M&A at Citigroup. “Despite the instability of the last month, M&A activity remains strong and on pace to match or even exceed 2007.”

Fueling the M&A boom this year has been low historically interest rates, which makes borrowing cheaper. Also helping matters has been the increased activity in “mega-deals,” or mergers valued over $10 billion. Such mega-deals accounted for 38.0% of global M&A this year, Mergermarket said.

Behemoth deals so far include:

*Royal Dutch Shell’s $70 billion bid for U.K. oil and gas producer BG Group in April

*Charter Communications’ offer to buy fellow cable giant Time Warner Cable for $55 billion in May

*Heinz’s plan to merge with Kraft Foods Group in a deal valued at $46 billion in March

Meanwhile, other mega-deals could still emerge, including expectations that beer giant Anheuser-Busch InBev will make an offer for SABMiller. A marriage between the brewers would rank among the top three largest deals ever and could therefore “tip the scales,” says Kirsty Wilson, global research editor with Mergermarket.

  Categories: