Goldman Tops M&A List as Berkshire-Heinz Signals Rebound


When Hormel Foods Corp. announced in January that it had signed a $700 million deal to acquire the Skippy brand from Unilever NV, analysts joked about putting peanut butter on Spam. Investors liked the combination of foodmakers: Hormel’s stock rose 7 percent by the end of the next day.

Since the start of 2012, investors have applauded companies that braved a weak global economy to grow their core business through acquisitions. It was a bright spot in a dismal year for mergers, Bloomberg Markets magazine will report in its April issue.

“The stock price for the buyer has gone up after making smart acquisitions,” says Steven Baronoff, chairman of global mergers and acquisitions at Bank of America Merrill Lynch. “A lot of companies will need to enhance growth through acquisition.”

Global M&A volume shrank 8.7 percent to $2.2 trillion last year, according to Bloomberg data. Chief executive officers were skittish about tie-ups because of the European recession and concerns that fiscal changes could slow the U.S. economy.

Goldman Sachs Group Inc. led the 2012 Bloomberg Markets ranking of M&A advisers, earning $1.77 billion in fees. The firm’s work on four of the largest mergers of 2012 helped it retain its No. 1 position for the 10th straight year. Goldman advised copper producer Xstrata Plc in its announced sale to Glencore International Plc for $47 billion -- the biggest hookup of last year.

Asian Deals

Energy companies were the most active dealmakers as firms bought assets in advance of an expected rise in natural gas prices. Oil exploration and production companies were the top takeover targets by value, with $144 billion in deals. M&A by consumer goods firms also rose last year, while industrial and financial companies cut fewer agreements.

Asian companies bought more firms in the U.S. -- a trend that’s likely to continue, says John Studzinski, head of Blackstone Group LP’s advisory unit in New York. U.S. acquisitions by Japanese firms totaled $74 billion, up from $44 billion in 2011. In the biggest such merger of the year, Softbank Corp. of Tokyo agreed to pay $37.8 billion in October for Overland Park, Kansas-based Sprint Nextel Corp.

“I see Asian companies wanting to acquire brands, technology and other expertise in open markets,” Studzinski says.

The big deals announced on Feb. 14 have given bankers hope that 2013 will be a better year for M&A. Berkshire Hathaway Inc. and 3G Capital Inc. agreed to buy H.J. Heinz Co. for about $23 billion, and US Airways Group Inc. will merge with American Airlines in an $11 billion deal. Some CEOs, concerned that low interest rates may start to rise later this year, may make acquisitions before cheap financing disappears.

Big Oil Firepower

“You have the most attractive debt market in a generation,” says Osmar Abib, co-head of Credit Suisse Group AG’s energy investment-banking practice. He expects big oil to forge hookups. “They have plenty of firepower,” Houston-based Abib says.

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