Global mergers and acquisitions slumped this quarter to a level not seen since the aftermath of the financial crisis amid increasing concern the economic recovery is deteriorating.
Companies have announced $446bn of takeovers since June 30, the smallest amount since the third quarter of 2009, according to data compiled by Bloomberg. Chinese state-run oil company Cnooc Ltd.’s proposed purchase of Nexen Inc. was the only transaction to top $10bn in the period, the data show. Acquisitions are now on pace to drop 15% in 2012 to $2 trillion, the lowest in three years.
Bloomberg reports that cross-border takeovers have accounted for about half of all announced deals this year, a trend that may continue with European Aeronautic Defence and Space Co. in talks to combine with BAE Systems. Still, while chief executive officers worldwide are sitting on at least $3.4 trillion in cash, many remain reluctant to pursue deals as Europe’s sovereign-debt crisis drags on and signs grow that China’s economy is slowing.
'Executives have the cash, but they don’t have the conviction', said Andrew Bednar, head of advisory at Perella Weinberg Partners, the New York-based investment bank. 'I don’t see any miraculous change in the M&A markets for the foreseeable future'.
This quarter’s slowdown has been most pronounced in Europe, where takeovers accounted for about $92 billion, or 21 percent, of global activity, the continent’s lowest share since 2010. The Americas accounted for $248 billion of transactions, and there were $104.5bn in the Asia-Pacific region.
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image: © Matthew Hine