M&A Expected to Increase in 2012: Expert
So far this year merger and acquisition activity has been down, but Sarah Syed, head of private equity at Mergermarket, says that M&A is likely to increase in the second half of 2012.
“A lot of dealmakers we speak to are saying that their pipeline is really quite full,” she told CNBC. “They are looking forward to a stronger second half of the year.”
This prediction comes after the acquisition of International Power by GDF Suez failed. GDF Suez owns 70 percent of International Power and offered to buy the remaining 30 percent for 6 billion pounds ($9.5 billion). International Power refused the offer saying that the deal undervalues the company and GDF Suez is now considering removing their offer.
Syed says that companies are trying everything they can to make deals including examining all types of finance to make deals.
According to Syed, countries are looking to grow rapidly and the future increase in M&A will be from Eastern investors. “We’re seeing a lot of Asian players enter Western auction processes as well whereas a few years ago there would be very few Asian player in an auction process.” She attributes the slow start to the year to the high price of these deals.
“There are people out there that do have the cash and want to put it into investing,” Syed says, “but some deals are taking a little bit longer because of the prices and valuations being so high.”