Global Investor

Action-packed year for global M&A activity

Maulik Madhu | Updated on January 24, 2018 Published on July 12, 2015

bl13_MnA.jpg

Pharma, energy and food have been the hotspots for merger deals



After a few years of tepid action, global merger and acquisition (M&A) activity boomed in 2014 and has sustained through 2015. The value of global M&A hit $1.7 trillion in January-July 2015, 29 per cent higher than in the comparable 2014 period. At 12,450, the number of deals too is up 6 per cent compared with last year. This includes both completed and pending deals.

North America and Asia Pacific, which account for three-fourths of the mergers and acquisitions worldwide, have seen deal-making (in terms of value) surge 36 per cent and 56 per cent, respectively, so far in 2015. The deal count too is higher (15 per cent up) for companies from the Asia Pacific region.

Chinese companies have been active deal makers in 2015, striking deals worth $164 billion in 2015, more than double that in 2014. The deal count too is a quarter more than last year. In India, on the other hand, the aggregate deal value of $6 billion until July 2015 has been only two-fifths of that in January-July 2014. The deal count, though, is up 39 per cent.

So, which sectors have been the hotbeds of activity in 2015? Pharma, oil and gas, real estate and food companies have accounted for a chunk of the deal making in 2015.

Big deal

The $55-billion HJ Heinz Company and Kraft Foods Group merger, which has created one of the world’s largest food and beverage companies, has been the biggest deal so far.

The merged entity is expected to be in a better position to stand up to the challenge of shifting consumer preferences, from processed foods to healthier options. On completion, energy giant Royal Dutch Shell’s proposal to buy BG Group for $70 billion would create the world’s largest liquefied natural gas company.

But, given the mammoth size of the combined entity, the acquisition needs the go-ahead from anti-trust bodies in several countries.

Having got the US Federal Trade Commission’s nod, the proposed deal has already passed its first hurdle. As oil and gas producers worldover battle the impact of falling crude prices, the industry is predicted to see more consolidation.

In the pharmaceutical space, the $19.8-billion takeover of Pharmacyclics by AbbVie has been the largest so far.

The acquisition, also one of the year’s most expensive, will help AbbVie reduce its dependence on a single product and diversify its product portfolio.

The healthcare services industry too has seen hectic activity; many deals are yet to be approved, though.

With ObamaCare (Affordable Care Act) bringing in more business for health insurance companies but at the same time forcing them to cut costs, many players have been engaged in merger talks. Aetna’s proposed acquisition of rival insurer Humana for $37 billion, which is still awaiting regulatory approval, is one such deal.

Another industry which promises much action is media — here Charter Communications’ $79-billion proposed purchase of Time Warner Cable is one deal to watch out for.

With Americans increasingly moving away from television to watching videos on the internet, cable companies have been scouting for M&As to gain scale. The deal, which will quadruple Charter Communications’ customer base, is expected to bolster its bargaining position with television network companies.

Published on July 12, 2015

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
null
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.