Global M&A hits new high in H1

BY Matt Atkins

The value of global M&A rose 3 percent in H1 2014, hitting $2.03 trillion according to information collected by M&A research firm Zephyr. Volume slipped, however, dropping from 41,496 deals in H2 2013 to 35,429.

In the first six months of the year, deal value increased across most continents. The largest increase was in the Middle East, where M&A value more than doubled from $3.54bn in H2 2013 to $7.13bn. Western Europe increased 19 percent from $464bn to $553bn over the same period while M&A recorded for North America improved marginally, hitting approximately $770bn. Asia-Pacific advanced from $476.75bn to $478.23bn. Of all regions examined, Central and Eastern Europe was the only one to see a decline. Slipping from $124.10bn in H2 2013, to $68.72bn. H1 value in the region was the lowest seen since 2012.

While deal value rose generally, volume declined across the board, with the exception of the US. “M&A value has increased in most regions in H1 2014, with global value reaching its highest level for a number of years," said Zephyr director, Lisa Wright. "The positive result is in stark contrast to global volume, which has hit its lowest point in the last nine periods under review. This suggests that deal considerations are increasing, with acquirers willing to spend more in order to ensure they get the best targets."

The rebound has spread across most sectors except financials, where tougher regulation has suppressed appetite. However, the healthcare sector has been the busiest to date, with deals tripling in value to $317.34bn, according to Thomson Reuters data.

A growing trend in the healthcare sector has been inversions by US firms – allowing them to domicile in a country with a lower corporate tax rate. US medical device maker Medtronic Inc struck a $42.9bn deal for Ireland-based rival Covidien Plc in June, in one of the largest attempted inversions. Pfizer's attempted takeover of AstraZeneca, and AbbVie's offer for Shire, would have seen both firms cut their tax bills while also allowing them to access the cash held offshore without paying US taxes.

The second-busiest sector for dealmaking has been media and entertainment, with deal volumes almost tripling to $220.7bn. This is the largely the result of two mega mergers – Comcast Corp's $45.2bn bid for Time Warner Cable and AT&T Inc's proposed $48.5bn acquisition of DirecTV.

Report: Zephyr Half Year M&A Report: Global, H1 2014

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