M&A May Slow on ‘Record’ High Valuations, UBS's Vereker SaysBy
Outbound investment from China, inbound U.K. deals suffering
Total deal spending is $1.5 trillion this year, down 2.2%
Mergers and acquisitions may be headed for a slowdown amid high valuations and an uncertain outlook around monetary policy, according to William Vereker at UBS Group AG.
“I look at record-high valuations across many exchanges, I look at a very liquid backdrop with the ongoing easing of monetary policy, you’ve got an uncertain outlook on interest rates,” said Vereker, global co-head of investment banking at UBS, in an interview on Bloomberg TV. “Ultimately some of the core drivers of M&A are likely to still be there, but I just wonder whether the deal volume might be slightly slower.”
In addition, some of the biggest drivers of M&A have hit roadblocks that are preventing acquisitions this year. Large Chinese bidders, which were behind many of last year’s deals, are less active amid a government crackdown on cross-border takeovers, Vereker said. Volumes in the U.K., the largest M&A market in Europe, are down “materially” since the country voted to leave the European Union last year, he said.
About $1.5 trillion in M&A has been announced so far this year, down 2.2 percent from the same period last year, according to data compiled by Bloomberg. Announced deals involving Chinese companies are down 22 percent, while overseas acquisitions of U.K. targets have fallen 14 percent, the data show.
Deals UBS advised on this year included China Investment Corp.’s 12.3 billion euro ($14.5 billion) agreement to purchase Blackstone Group LP’s European logistics business in June and the merger of Vodafone Group Plc’s Indian unit with Idea Cellular Ltd.