Companies Set to Take Advantage of Their Cash Positions to Make Large M&A Deals

There is a post-crisis high in cross-border M&A deal values as companies worldwide are continuously on the look out to take advantage of their cash positions to make large deals.

A report from FT Remark and Baker & McKenzie report reveals that in the first three months of 2014, there were 1,087 international deals worth a total of US$263.1 billion, according to data from Mergermarket.

The report also indicates that companies are making an extra push to achieve global presence, with 599 deals worth US$184.4 billion spanning across two different regions in the first quarter of 2014 – the highest value for six years.

And companies are overwhelmingly positive about their cross-border dealings, with 86% of respondents surveyed rating their most recent transaction a success.

As a reflection of this, the report also shows that over a third of respondents (34%) plan to undertake further cross-border transactions over the next two years.

Europe was the most prominent target market for dealmakers looking outside their home markets in 2013, with 38% of transactions by value taking place in the region.

By contrast, North America, which saw the same amount of inbound M&A spending as Europe in 2012, was the target of only one in four deals last year.

Africa saw the most rapid increase in appetite among dealmakers, with the share of global M&A activity rising from 4% to 7%.

“The healthy flow of large M&A deals seems to be the main theme of 2014,” says Giovanni Amodeo, Global Editor in Chief for Mergermarket.

Amodeo noted that while in 2013 we saw a booming February with four large transactions which were not followed by a busy remaining part of the year, this year companies across the sectors and regions are continuously on the look out to take advantage of their cash positions to make large deals.

"Particularly active is the pharmaceutical sector which has not seen more than three transactions above US$5 billion since 2006. This year we have seen eight such transactions, six of which involve two different regions,” Amodeo said.