U.S. merger volume hits record despite soft June

June 28 - Reuters - Merger activity in the United States hit a new record in the first half of the year, fueled by deep-pocketed private equity firms and low borrowing costs, even as the pace of deals began to slow in June, investment bankers said on Thursday.

The U.S. broke through the $1 trillion level for total mergers, marking the first time that mergers have hit that level in the first six months of any year, according to research firm Dealogic.

So far this year, U.S. merger volume totaled $1.005 trillion, up 36 percent from the same period a year ago. The number of deals, however, dropped 12 percent, Dealogic said. Read More.

M&A deals soar despite credit concerns

June 28 - FT.com - The volume of merger and acquisition activity worldwide surged 50 per cent to reach $2,780bn (€2,067bn) during the first six months of the year, despite growing concerns among companies about a turn in the credit markets and fears that the cycle has reached its peak.

Since 2003, chief executives and private equity investors have been fuelling the M&A boom by taking advantage of cheap debt and strong cash flows to bid for companies with attractive valuations. However, in recent days, several companies have postponed or withdrawn planned offerings of shares, bonds and loans because of concerns over the US subprime market, raising fears that the cycle has reached its peak and activity will slow. Read More.

M&A Deals Surge Through May in 2007

June 27 - Associated Press - Easy access to debt capital and rising corporate profits led to a surge in merger and acquisition volumes in the first five months of 2007, according to a study by consulting firm PriceWaterhouseCoopers released Wednesday.

Deals involving U.S. firms had total value of $845 billion through May, 10 percent more than in the first six months of 2006, and equal to 53 percent of total volume last year.

"Aggressive lending by banks and institutional investors coupled with rising corporate profits and reasonably low default rates are key factors driving this increase," said Bob Filek of PriceWaterhouseCoopers. Read More.

Most Indian M&A deals are bite-sized: Tarun Khanna

June 27 - LiveMint.com - Tarun Khanna, Jorge Paulo Lemann professor of strategy at Harvard Business School, discusses the globalization efforts of Indian companies.

Jorge Paulo Lemann professor of strategy at Harvard Business School, Tarun Khanna, says some Indian firms are born ‘global’ and that their global acquisitions will gain further momentum. Khanna was in Mumbai for the launch of Going Global Initiative, an effort by industry lobby Confederation of Indian Industry to launch a support group and knowledge bank for Indian companies seeking a global presence. Khanna, who has written extensively on the rise of India and China, is creating an index of globalization that companies can use to benchmark themselves. In an interview with Mint, Khanna discussed the globalization efforts of Indian companies. Read Q&A.

Value of mergers and acquisitions in global metals doubles to $77.4 billion

June 26 - Canadian Press - Deal activity in the global metals industry soared to new highs last year, with the total value of mergers and acquisitions more than doubling to $77.4 billion, a PricewaterhouseCoopers report released Tuesday finds.

In all, 224 deals were disclosed, down from 250 in 2005 but the value of the Top 10 deals was $65.5 billion, a huge increase on the $19.4 billion of the previous year, the report states.

Most of the deal-making took place in steel, accounting for 166 transactions worth $70.4 billion. Read More.

Another record for M&A, no slowdown seen -Thomson

June 22 - Reuters - Global corporate merger activity in the first half of 2007 surged 53 percent to a record-high $2.5 trillion as Europe equalled the United States for the first time in four years, new research released on Friday showed.

Mergers and acquisitions in the first half exceeded the 1999 all-time high of $1.9 trillion by a third, according to preliminary figures from market data firm Thomson Financial. Read More.

As Paris Air Show Opens, Worldwide Defense/Aerospace M&A in 2007 Reaches Record $33.2 Billion Level

June 19 - PRNewswire - Going into the Paris Air Show, M&A activity for the year is already running at record rates, with $33.2 billion in transactions announced or completed, according to Defense Mergers & Acquisitions (DM&A), the industry's premiere online news and analysis service focused on M&A activity in the defense, aerospace, and government technology sectors.

Of the 225 deals completed or in progress, 20 are by U.S. companies abroad (including the year's largest deal, GE's $4.8 billion acquisition of Smiths Aerospace). An even larger number of deals, 26, feature international buyers moving into the U.S. market. This total is dominated by the U.K. (with 14 deals), but also includes Canada (with 6), Scandinavia (3), the Netherlands (2), and the UAE (1). In terms of value, foreign buyers in the U.S. had the upper hand, with $12.8 billion worth of transactions, more than twice the $5.5 billion which American buyers spent outside the U.S. Read More.

Interview: Hector Cuellar; Valuations in US, Europe are much cheaper than in India

June 17 - The Financial Express - Hector Cuellar, president, RSM Equico, a leading international investment banking firm specialising in mergers, acquisitions, divestitures and corporate finance for middle-market businesses, on his visit to India talked to players in the IT/ITeS, pharma, healthcare, engineering and construction companies among others, where he sees good response from the Indian companies for mid-size deals overseas. Cuellar shares his views with Smita Joshi of The Financial Express, on his plans for India and the M&A trend. Read More.

India set to spend $35b in global mergers

June 18 - GulfNews.com - Indian firms flush with funds are expected to spend more than $35 billion this year on buying or merging with foreign companies, a report said yesterday.

Indian businesses seemed to have an increasing appetite for risk and this was driving global merger and acquisition deals, according to the report from Ernst & Young and the Federation of Indian Chambers of Commerce and Industry. Read More.

Interest rates not yet seen threatening IPOs, M&A

June 14 - MarketWatch - Investment bankers and analysts are keenly watching the global rise in interest rates, but said that they don't expect it to derail deal-making or IPO activity anytime soon.

The yield on 10-year U.S. Treasurys climbed toward a five-year high of 5.25% Tuesday, while in Europe the 10-year Bund yield rose almost 6 basis points to 4.6%. The jump in yields has been driven by strong economic growth and rising inflation, which has prompted central bankers in Europe, Japan and elsewhere to raise, or consider raising, interest rates.

The move in bond yields put equities around the globe under pressure, but bankers said that the impact on the European new issues market had been limited so far. After unsteady starts Wednesday, most European bourses were recovering later in the day, while U.S. markets were stronger. Read More.

RSM McGladrey CEO/CFO Survey Indicates Positive Growth for Small, Middle-Market Companies

Many U.S. manufacturers and wholesale distributors are missing global opportunities, overlooking risk and underutilizing tax credits and government programs.

June 14 - Business Wire - The manufacturing and wholesale distribution segments in the United States continue to see positive growth across several industry segments, according to the RSM McGladrey 2007 Manufacturing and Wholesale Distribution National Survey, released today.

Conducted this spring, the second annual RSM McGladrey survey provides insights into what CEOs, CFOs, and other senior industry executives are thinking, doing and planning to grow their businesses in an increasingly competitive marketplace. Participants were asked questions about cost structure, profitability, technology initiatives, operations, globalization and more.

A total of 947 surveys were completed, representing a strong cross sample of U.S. companies in varying industry segments and revenue size. Read More.

Mergers' India Connection

June 14 - WSJ.com - There are many low-margin businesses where outsourcing operations to India can mean the difference between profit and loss. Investment banking, with its big fees and lavish paychecks, isn't one of them.

But some Wall Street securities firms are going that route. Merrill Lynch & Co. has taken a minority stake in the Indian research firm Copal Partners, which specializes in creating what are known as "deal books" for corporate mergers and takeovers.

Copal is officially based in the United Kingdom but maintains a research staff of about 540 near New Delhi. Founded five years ago, the firm made its name by putting together deal books, which investment bankers give to potential deal participants, but more recently its research has branched into other areas, like credit and special situations. Read More.

Tender-offer mergers on rise

June 13 - Philly.com - Corporate acquisitions through tender offers are making a comeback, a trend that could reduce shareholder protests over merger prices.

Most mergers and acquisitions need to win support from a majority of the target company's shareholders via a costly and time-consuming proxy-voting process. In tender offers, the acquirer aims to take over a company by buying up its shares, usually at a premium to entice shareholders to sell, or tender, their shares to the acquirer.

The use of tender offers in friendly mergers had been all but dead in recent years because of confusion over the rules. But such deals - which can take half the time of a merger approved through a vote of shareholders - were revived last year after the Securities and Exchange Commission clarified the process. Read More.

Harris Williams says lenders are key to M&A boom

June 12 - Reuters - Middle market M&A specialist adviser Harris Williams & Co. said on Tuesday it expects no prolonged slowdown in the record pace of global mergers unless lenders become less aggressive.

Some experts have said higher interest rates in Europe and uncertainty about the cost of borrowing in the United States could slow some aspects of the global M&A boom.

Accommodating debt markets helped spur M&A activity to record levels in the past year, with more than $4 trillion of deals in 2006 alone, but the hot pace has slowed during the past two weeks. Read More.

Indian M&A Deals Set Yearly Record -- By May

June 12 - Forbes - 2007 isn't even half done, but it’s already been a record year for mergers and acquisitions in India. There has been over $50 billion worth of equity deals from January through May, according to data from Grant Thornton.

Indian businesses reported 287 strategic mergers and acquisitions worth $46.8 billion and 165 private equity deals worth $5.1 billion, the accounting and advisory company said.

Those numbers are a vast leap over 2006, in which the total value of all deals was $28.2 billion, which itself was 54% higher than 2005. Tech businesses captured the largest proportion of deal value last year at 14%. This year, some of the largest investments have been in telecommunications and steel. Read More.

Indian M&A spiced with foreign flavour

June 11 - Deccan Herald - India Inc is showing a distinct foreign flavour in its M&A deals, with cross-border deal value going up nearly 16 times at $4.11 billion as compared to the value of domestic deals in May, a latest report shows.

According to data compiled by global consultancy firm Grant Thornton, 42 cross-border deals with an announced value of $4.11 billion were carried out by Corporate India in May, while 32 domestic M&As garnered just $0.26 billion to their kitty.

The total number of M&A deals announced in May was worth $4.37 billion, with United Spirits buying out Whyte & Mackay for $1.11 billion, and Suzlon Energy’s controlling stake in REpower for 1.7 billion dollars, being the most significant deals of the month, Thorton said.

The M&A deals in the month totalled 74 with announced values of $4.37 billion as against 57 deals worth $3.98 billion in April, Thornton’s Dealtracker report said. Read More.

Equity deals till May race past $50 bn

June 11 - The Economic Times - For the first-time ever, total equity deals struck by India Inc in a year has crossed the $50-billion mark. A total of $46.8 billion worth of strategic mergers & acquisitions (M&As) and $5.1 billion worth of private equity (PE) deals were announced in the country during January-May 2007. Compare this with M&As worth $10.8 billion and $3.5 billion of PE deals struck during January-June 2006.

As per the latest dealtracker of advisory firm Grant Thornton, 287 strategic M&A deals worth $46.8 billion were struck in the first five months of this year. Read More.

Is a wave of ethanol mergers coming?

June 7 - Agriculture Online - This week's announcement that the local owners of Dakota Ethanol, a 48-million gallon ethanol plant in Wentworth, South Dakota, plan to merge with Countryside Renewable Energy, LLC, may not be the last.

Countryside, founded by Des Moines, Iowa, venture capitalist John Pappajohn, has been set up to facilitate the mergers of smaller farmer-owned plants into a larger business able to compete as bigger players move into ethanol production.

"For independents, this is a middle ground between standing alone and selling out," Brian Woldt, a farmer and Dakota Ethanol board member told Agriculture Online. "Consolidation is both an offensive and defensive move. If it's going to happen, you can shape what it will look like." Read More.

Food Stocks May Be Poised For New Round of M&A

June 6 - MSNBC.com - Last week, Kraft Foods shares went on a wild ride driven by market chatter that Buffett's Berkshire Hathaway was eying an investment in the food company. The maker of Oscar Mayer meats, DiGiornio pizza and Oreo cookies isn't the only food company at the center of such speculation. Pittsburgh ketchup maker H.J. Heinz was recently rumored to be in talks with a private equity buyer, but CEO Bill Johnson tried to dispel that talk in a recent interview on CNBC.

The recent wave of M&A and private equity has missed the larger packaged food manufacturers, but the sector remains on the radar screen of private equity players, who could be poised to begin a new round of deal-making. After all, the group has long been prized for its stable profile and reliable cash generation. Read More.

Indian industry optimistic about M&A deals

June 6 - The Hindu - The Indian industry is still game for global merger and acquisition (M&A) deals even as a majority of the top corporate honchos are of the view that they are paying much more than the actual value of the companies targeted.

According to a survey by global research and analysis firm Evalueserve, even though there is near unanimity among corporates and analysts that aggressive buy-out deals are essential for growth and geographical expansion, 56 per cent of the 100 top executives surveyed feel that the acquiring companies are shelling out more than the true value for their acquisitions. "Most executives feel that the acquisition trends reflect India Inc.'s global leadership aspirations and that M&A is an integral part of the companies' globalisation strategies." Read More.

Use of insurance for M&A deals growing

June 4 - Investment News - The fear of mergers-and-acquisition agreements’ going sour increasingly is being eased by insurance, according to industry experts.

With private-equity and other M&A activity gaining steam, “transaction facilitation” insurance indirectly protects advisers’ clients — many of whom are investors and stockholders in companies being acquired or making acquisitions. The insurance covers losses if transactions are tarnished by contract breaches or events that due diligence failed to anticipate.

The policies get their name from their ability to grease deals that might otherwise be delayed — or abandoned altogether — because of fears involving potential liability, contract breaches or other unanticipated events. Read More.

Future Mergers

June 1 - Energy Central - Groupings of mammoth super-regional utilities in the United States won't happen any time soon. But analysts expect mergers in other forms to keep occurring as power and gas companies here seek new efficiency gains.

The ultimate goal of those companies is to increase their earnings growth. Through expansion, they could earn more than 2 percent, and up to 5 percent, while at the same time drawing new equity investors. Repeal of the Public Utility Holding Company Act of 1935 that restricted utilities' business activities has attracted investor interest. But it has also attracted more scrutiny from state regulators. That's why the trend overall is for companies to acquire strategic divisions -- ones that fit nicely with corporate missions.

Consider Williams Cos., which just recently agreed to sell most of its power assets to the energy trading subsidiary of Bear Stearns Cos. for more than $500 million. Williams is now completely out of the electricity business. Read More.

Foreign investors shy of Chinese mergers and acquisitions

June 2 - People's Daily Online (China) - Mergers and takeovers of Chinese companies by foreign investors brought in actual investment of 1.4 billion U.S. dollars last year, up 49 percent from a year earlier but accounting for only two percent of the total foreign investment in use in 2006.

Greenfield investment, or new operations on a bare site, remained the dominant foreign investment, Sun Peng, deputy director of the Foreign Investment Department with the Ministry of Commerce, said on Friday at the 2007 International Business Group Annual Conference.

The government approved almost 1,300 foreign mergers and acquisitions last year, up 25 percent from 2005, but most were non-state-owned enterprises, accounting for 62 percent of last year's total foreign contractual merger and acquisition investment of 4.8 billion U.S. dollars. Read More.