The value of mergers and acquisitions around the world stands at $552.4 billion via 4,880 deals in 2014 so far, the highest total since 2007, when $617.2 billion worth of deals had been completed at this stage of the year, and up 13 percent from the same period in 2013, according to figures from Dealogic.
A healthy M&A market is often viewed as one of the key signs that optimism has returned to the global economy. However, the market at the moment seems to be skewed towards the U.S., which accounts for 60 percent of the value of deals, followed by China, which has less than 10 percent of the value of deals this year so far.
This reflects the improved optimism about the performance of the world's largest economy. U.S. companies have spent $30 billion less outside the country than non-U.S. companies have buying U.S. assets in 2014 to date, according to Deutsche Bank strategists. In contrast, interest in buying Australian companies from outside Australia has dried up, as fears about its economy persist.
Facebook's $16 billion purchase of messaging service What'sApp, and Comcast's $45.2 billion deal to buy Time Warner Cable are just some of the big deals announced so far this year.
Companies have shored up their balance sheets during the crisis, with US companies in particular boosted by the cheap loans provided under the Federal Reserve's asset purchasing program, so there is more cash to spend.
There is also now more optimism about the global economic recovery. Continued low interest rates mean that borrowing to fund acquisitions is cheaper. And shareholder activism has reared up again. Noisy interventions from people like Nelson Peltz at Pepsi and Carl Icahn at eBay mean there is more pressure on companies to take action rather than maintain the status quo.
The return to the M&A fray will also mean better paydays for the investment banks which advise on these deals. Morgan Stanley leads the global rankings so far this year by advising on transactions worth $159.6 billion, followed by JPMorgan and Bank of America Merrill Lynch, according to Dealogic.
Source: CNBC
