M&A work rallies during August

This August has been the busiest month for M&A deals in more than a decade, according to the latest Thomson Reuters data. According to Reuters, there was a global increase in value of nearly 10% for M&A deals from January to June 2010, as compared to the first six months in 2009. Announced deals and offers during the typically slow month surged to US$262bn worldwide, on the back of low interest rates, record cash piles and low stock-market values.

This is the highest deal values and offers announced since August 1999, when US$275bn value was reached. However, in terms of the number of deals it is lower than last August, despite the higher dollar value. Deal flow this year to date totals US$1.56trn, a 22% increase on the same time last year, and private equity deals during August totalled US$20.7bn, which was double the amount seen 12 months ago.

The rush of deals in the US, Canada and Australia in the past month has renewed confidence in the market. Not only are there more deals, but there have been multiple bidders involved in the deals – for example AWB, where both GrainCorp and fertilizer giant Agrium made offers to purchase the Australian agribusiness AWB.

Although Australia-based M&A activity decreased in the first six months of the year by more than 30% compared to 2009 (from A$107.7bn to A$71.3bn) the past two months of activity have been in stark contrast to the first six months of this year.

July and August are not the typically busy periods for M&A activity, and US analysts expect the rebound to pick up further when the traditional busy period commences, after the US Labor Day holiday on the first Monday in September.

Friendly deals drive M&A growth 25 August 2010


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