India to Missouri Deals Drive Busy $47 Billion Day of TakeoversMatthew Monks and Mohammed Hadi
Companies from India to Missouri made yesterday one of the busiest for takeovers this year, announcing $47 billion of acquisitions and extending a jump that’s brought dealmaking to its highest amount since before the global financial crisis.
Topping the list were cement makers Holcim Ltd. of Switzerland and Lafarge SA of France, which agreed to merge in a $23 billion stock swap that is Europe’s largest deal this year. Along with buyers including India’s Sun Pharmaceutical Industries Ltd. and Missouri-based utility Laclede Group, they brought the value of deals announced this year to $725.5 billion -- the most for this period since 2007.
The announcements underscore pent-up corporate demand for acquisitions, said Herald Ritch, chief executive of Sagent Advisors Inc., an independent investment bank in New York. Still, some of Ritch’s clients remain wary of taking risks, he said, and that’s keeping him from predicting the rebound will last through the year.
“It was a good first quarter, and now a little bit more,” said Ritch. “It’s too early to call this the turning point, even though there have been some nice, big deals. There is no reason not to expect an M&A boom at some point.”
There’s more to come: Merck & Co. is awaiting final bids for its over-the-counter health-products unit, which could fetch over $10 billion, people with knowledge of the matter said. Meanwhile, Koch Industries Inc. and Goldman Sachs Group Inc.’s private-equity unit are near an agreement to buy printing-ink maker Flint Group from CVC Capital Partners Ltd. for more than $3 billion, people familiar with the matter said.
The $47 billion doesn’t include the $23 billion purchase of Vivendi SA’s SFR unit by Altice SA. Vivendi and Altice said last month they were in exclusive talks and sealed the deal yesterday. With the SFR sale included, the value of deals announced would top $70 billion -- the highest total since Feb. 13, the day Comcast Corp. said it agreed to acquire Time Warner Cable Inc., data compiled by Bloomberg show.
Shareholders are rewarding companies for taking risk, Michael Carr, Goldman Sachs’s co-head of America’s M&A said last month. Among U.S. companies worth more than $1 billion, about three quarters of acquiring companies’ shares have gained following deal announcements in the fourth quarter of 2013 and the first quarter this year. It’s a reversal from declines that acquirers experienced five years ago.
“Shareholders are accepting the companies’ view of synergies and cost savings, and they’re giving a lot more credit than they did,” Carr said at the 26th annual Tulane University Corporate Law Institute in New Orleans last month.
Those gains extend outside of the U.S. too. Sun Pharmaceutical rose almost 3 percent after saying it’ll acquire Indian rival Ranbaxy Laboratories Ltd. in a $4 billion deal, including debt. Shares of both Holcim and Lafarge gained, while France’s Altice surged over 11 percent after it won a bidding war for SFR.
“I’ll take all of these we can get,” said Ritch.