Trader Talk

Merger Monday: Changes In Key Players


Merger Monday sure isn’t what it used to be, with just a small deal from Humana on the boards today. However, look a little farther and you can still see deals, but the players are changing. That's the point in a very interesting note this morning from Joseph Quinlan at Bank of America.

Quinlan's point: "The traditional rainmakers - corporate giants from the United States, Europe and Japan - now face stiff competition from the dealmakers in the developing nations." He points to last week's announcement by Singapore Airlines to acquire a 24% stake in China Eastern Airlines for nearly $1 billion, as well as the recent $700 million bid by Taiwan-based computer maker Acer for Gateway .

He notes that:
--Chinese banks are buying large banking stakes in Britain
--Russian energy companies are eyeing strategic assets in Europe and Australia
--Middle East firms have snapped up companies in the U.K. and the United States
--Indian companies have also been on a global shopping spree.

Quinlan's conclusion: "While the rising cost of global capital signals a peak in the global M&A boom, the global urge to merge remains relatively strong, thanks to the developed nations' continued M&A push."

More importantly, firms from the developing nations are now on course to acquire more assets in the developed nations than vice versa.

There is a risk here: as more foreign companies seek to play in our M&A space, there are concerns about a protectionist backlash. But we'll deal with those issues one at a time.

Questions?  Comments?

Related Tags