October witnessed ‘see-saw’ in M&A deal table

October witnessed ‘see-saw’ in M&A deal table

New Delhi: The month of October assumed significant importance in the merger and acquisition calendar of this year as the announced M&A (mergers and acquisitions) volume and the withdrawn deal volume hit record highs, a report says.

Global M&A volume totalled $451.5 billion in October, the largest month so far this year, up 30% from September, deal-tracking firm Dealogic said in its latest report adding that in this very month $119.8 billion worth of deals were withdrawn, the highest monthly withdrawn volume in 2008 year-to-date.

“October saw 142 deals withdrawn globally, the most of any month on record. The five most active months, based on the number of withdrawn deals on record, have all been in 2008," Felipe Pizarro, an analyst with Dealogic said.

American companies were the most targeted as deals worth $236.9 billion were announced in October, the largest monthly volume on record, driven by capital injections into financial institutions by the US Treasury.

“US targeted Finance M&A totalled $180 billion, accounting for 76% of total US volume for October," Dealogic said.

Four of the top five largest merger and acquisition transactions in October were made by the United States government. These four transactions are the acquisition of four leading financial institutions like Citigroup Inc, Wells Fargo & Co, JPMorgan Chase and Co and Bank of America Corp.

Meanwhile, the acquisition of Wachovia Corp by Wells Fargo & Co for $15.1 million dollar was the other most significant M&A transaction of this month.

Global Finance M&A totalled $263.7 billion in October, making up 58% of the volume for the month, surpassing April, 1998 when finance deals accounted for 54% of global volume, driven by the $43-billion acquisition of BankAmerica by NationsBank and the $36.3-billion takeover of Citicorp by Travelers Group.

Driven by finance M&A deals of October, which was pursuant to the financial turmoil across the world, the global merger and acquisition volume so far this year also hit the $3 trillion mark.

Government investments into banks totalled $208.5 billion in October, with $156.5 billion invested in North American banks and $52 billion invested in European banks.

Meanwhile, according to experts, the crisis in financial markets is acting as a dampener for M&A deals. Although, valuations of companies have gone down, the banks are cutting on their exposure to funding the deals.

“Though the global M&A volume has reached a whopping $3 trillion mark, it represents a decline of 22% from its year ago period," Dealogic said.