M&A Activity Will Continue Despite Market Volatility: Analyst
As thethree major U.S. stock indexes continue to rally following last week's stock roller-coaster ride, mergers and acquisitions will continue despite increased volatility, one analyst told CNBC Monday.
"I think if you're a CEO and you have a strategic plan and you have an asset that you really like, last week's market volatility is a blip," said Jeffrey Solomon, Cowen Group's head of investment banking.
On Monday, Google announced it would buy phone hardware market Motorola Mobility Holdingsfor $12.5 billion to compete with smartphone rival Apple and to bolster the adoption of its Android mobile software.
On Monday, Time Warner Cable announced a $3 billion deal with Insight Communications and Transocean announced its purchase of Aker Drilling for $1.43 billion.
In addition to technology, Solomon also thinks the health-care sector will show consolidation as large-cap pharmaceutical companies seek to round out their drug discovery pipelines.
To fund these mergers and acquisitions, companies are turning to a variety of financing options. Some are buying other companies with cash while others are initiating stock-for-stock deals. Also, many companies are still turning to the financing market.
Solomon said since many small-cap companies are valued more attractively now than in recent months, this is a buying opportunity now for larger companies.
"I think there's really an opportunity for larger companies who are consolidators to really take advantage of those prices," he said.
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Disclosure information was not available for Jeffrey Solomon or his company.