Appetite for M&A at Five-Year High as Confidence Grows, EY Says

Appetite for mergers and acquisitions is at the highest level since 2010 amid increasing confidence in an economic recovery, according to a survey by consultancy EY.

The firm’s bi-annual Global Capital Confidence Barometer, which surveys more than 1,600 executives in 54 countries, found that more than half of companies plan to carry out acquisitions in the next 12 months.

More than three-quarters of executives are planning more deals after a busy 2014. While nearly one third are pursuing bigger deals, there is also an increasing interest in smaller bolt-on transactions, according to the survey.

“Executives express increasing optimism in the global economy, with much broader consistency across geographies than in 2014,” Pip McCrostie, EY’s global vice chair of transaction advisory services, said. “Companies are preparing bolder moves, including M&A, to generate future value.”

Momentum from last year, when more than 3 trillion of deals were announced in the busiest 12 months since 2007, is set to continue this year as startups and companies returning to the market also weigh deals, the survey showed. Along with the economic recovery, currency and commodity fluctuations are accelerating cross-border M&A.

Industries such as health care, consumer and energy have seen some of the biggest deals so far this year. Royal Dutch Shell Plc agreed last week to buy BG Group Plc for about 47 billion pounds ($69 billion) in cash and shares, in the oil and gas industry’s biggest deal in at least a decade. Mylan NV offered to purchase fellow drugmaker Perrigo Co. for $28.9 billion, to add to its generic medicine portfolio.

Last month, Kraft Foods Group Inc. said it will merge with H.J. Heinz in a deal orchestrated by 3G Capital and Warren Buffett’s Berkshire Hathaway Inc., creating the third-largest food and beverage company in North America.

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