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US leads megadeals market in the third quarter despite political uncertainty, study says

  • Mergers in the U.S. represented 42.1 percent of all deals made across the globe in the third quarter
  • Political uncertainty is seen as one of the biggest drags on megadeals despite the performance of major stock markets throughout this year
  • The market seems to have also been impacted by regulation fears

Five of the 10 largest megadeals made in the third quarter of this year were signed in the United States as investors shifted away from Europe, according to a report by Mergermarket.

Mergers in the U.S. represented 42.1 percent of all deals made across the globe in the third quarter. The largest megadeal saw the tie up of aerospace firms United Technologies and Rockwell Collins, totaling $29.9 billion. The merger was the second largest deal taking place in the U.S. so far this year.

However, global megadeals took a hit in the third quarter. Total volume reached $674 billion across 3,772 deals – the lowest quarterly level since the start of 2016. "As firms attempt to adapt to ever-changing political and technological circumstances, global M&A (mergers and acquisitions) has stuttered over the summer, following a strong showing in the first half of the year," Jonathan Klonowski, research editor EMEA at Mergermarket, said in a statement.

Political uncertainty is seen as one of the biggest drags on megadeals despite the performance of major stock markets throughout this year. Corporates are taking a cautious approach due to uncertainty regarding U.S President Donald Trump's promises to overhaul the tax system and financial deregulation.

Nonetheless, "the low deal count combined with stable value has pushed the global average deal value to $356 million – 5.8 percent higher than the year-to-date 2016 figure of $336 million," Monday's Mergermarket report said.

Overall, the market seems to have also been impacted by regulation fears, mainly from China. "Increased regulation, in China, Europe, and the U.S. have left sellers wary of pursing Chinese bidders due to concerns over whether deals will be able to close, despite higher premiums often being available," the report said.