Volatility in global capital markets do not seem to affect the appetite of companies for mergers and acquisitions since the start of the week were announced deals worth 40 billion. Dollars, writes Fianncial Times.
Only on Tuesday were announced a number of major transactions, including energy deal worth 12 bln. Dollars of Hong Kong tycoon Li caching to take place, the acquisition of Australian Oil Search by larger rival Woodside Petroleum against 8 billion. Dollars, the offer of the Japanese MS & AD British insurer Blackstone worth 5.3 bln. dollars, and the deal for the US hotel chain Strategic Hotels, which was bought by Blackstone against 6 billion. dollars.
With these transactions, the volume of announced since the beginning of the year, mergers and acquisitions worldwide reached 3 trillion. dollars. This is the highest level of pre-crisis boom of 2007, data of Thomson Reuters.
Experts from the banking sector indicate that market volatility could still have an effect on the way deals are structured and funded. Chris Ventreska expects more transactions in which payments are made primarily in shares and not in cash. So companies can hedge the risk of new turmoil in the markets.
At the same time there are likely financing transactions become more expensive, while debt markets remain stable. “In times of market volatility creditors can become a little more conservative, but not to the extent that would be jeopardized activity. But at least it will affect the valuation of assets,” said Robin Rankin responsible for mergers and acquisitions at Credit Suisse. “Unless recent adjustments lead to wider turmoil in the markets, we remain optimistic about activity in corporate transactions,” says turn Mark Sharif from Citigroup.