January 14 ,2014 | by Hari Sri

The $100bn Handshake: M&As Witness Early Year Roar

M&As Witness Early Year Roar

The ‘business takeover’ spiel has had an astonishing start in the new year – valued at over $100 billion. We chronicle some deals that were revealed and see what the future holds …

 

In a day of frenzied mergers and acquisitions activity, over $100 billion worth of deals were disclosed. These deals and offers constitute some of the biggest in years. One of them might well be one of the biggest offers for over half a decade.

 

The deals and offers

Time Warner Cable was made an offer of acquisition by Charter Communications totalling over $60 billion. However, BBC reported that Time Warner Cable rejected the offer this morning, terming it ‘inadequate.’ Goldman Sachs and LionTree are claimed to be advising Charter’s takeover bid, and this episode seems far from over.

Another target for acquisition was American whiskey major Jim Beam. Suntory Holdings from Japan managed to acquire Jim Beam for $16 billion. Additionally, tech firm Nest Labs was bought by Google in a deal purported to have cost $3.2 billion.

Britain’s own engineering major, Amec, has agreed a £1.9bn offer to acquire US-listed rival Foster Wheeler. The Telegraph stated that the British engineering group is bidding to create a £5bn group capable of offering services across the oil and gas chain’.

 

Merger Monday

City A.M. dubbed yesterday as ‘Merger Monday’; one that was driven by US financial powerhouses. They have good reason to claim that. American banks and consultancies had a major role to play in London’s Monday merger mania.

The City A.M. report stated:

Over the past 10 years, the share of global M&A fees taken by European-based banks such as Credit Suisse, UBS, and Deutsche, has declined from 24.47 per cent to 18.66 per cent, according to Thomson Reuters data.

Meanwhile, JP Morgan’s M&A market share for the EMEA region increased from 21 per cent to 28 per cent.

 

Foreign takeover ‘hot potato’

While facilitating deals does not stir up a debate, foreign takeovers of UK firms have proved a contentious issue. Financial Times reported that the resurgence of foreign UK takeovers has stirred a debate in political circles. Despite the British government’s repeated courting of foreign investment, takeovers have not gone down well with certain politicians.

Recently, the issue for those averse to foreign takeovers seems to be the ease with which they can be concluded. Takeovers of Invensys and Cadbury seem to be repeatedly brought up to make this ‘ease’ claim veritable.

 

Whether the sudden emergence of political opposition to ‘easy’ foreign investment results in barriers arising for UK M&As is unclear. But one thing’s for certain. There will be intense debate the moment another UK firm is acquired by a foreign firm. Only then will the true strength of the foreign investment opposition reveal itself. And it is certain to make for very interesting reading.

 

Desire a future as part of the corporate ‘deal-makers’? We offer an Advanced Certificate Programme in M&A and Private Equity, which is designed to help students develop a strong understanding of mergers and acquisitions strategies.

 

<Principal image courtesy reynermedia/Some rights reserved>

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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