October 2016 Sets Record For M&A At $251 Billion

Deal Value At Record

Estimates released by Dealogic show a record $251 billion worth of deals announced in October, up from the previous record of $240 billion in July 2015, according to a US News article referencing the Associated Press.

Some M&A Deals Announced In October

• AT&T Inc. T announces an agreement to buy media giant Time Warner Inc TWX in a $85 billion deal.
• QUALCOMM, Inc. QCOM is set to buy NXP Semiconductors NV NXPI for $38.50 billion.
• General Electric Company GE said it would combine its oil and gas business with Baker Hughes Incorporated BHI and spin it off as a separate public company, owned 62 percent by GE and 37.5 percent by Baker Hughes shareholders.
• TeamHealth Holdings Inc TMH announced a deal to be bought by funds affiliated with Blackstone Group LP BX for $6.1 billion in cash.
• British American Tobacco PLC (ADR) BTI has offered to buy the remaining stake it already does not hold in Reynolds American, Inc. RAI for $47 billion.

Global Tech M&A On A Roll

Dealogic noted that global technology M&A volume at $530.5 billion in the year-to-date period is the second highest annual total, trailing only the 2015 volume of $692.4 billion. Global semiconductors-targeted M&A volume hit an annual high of $127.1 billion in 2016, up 13 percent from the previous record of $112.2 billion set in 2015, Dealogic said.

Some Ditched Deals

Pfizer Inc. PFE called off its deal with Allergan plc Ordinary Shares AGN in April this year, citing the new rules of the Treasury called inversions, which took a shot at companies seeking to cut taxes through M&A route. This scuttled a $160 billion-deal in the making.

In May this year, Halliburton Company HAL had to abandon its offer for Baker Hughes, as it was not able to scale regulatory hurdles in several continents due to anti-trust concerns involved. The deal was valued at $35 billion.

What Influences The M&A Wave?

Companies usually look at M&A as a means of expanding market share or entering into new markets and verticals without having to make substantial investments. Usually, this happens when companies see their sales and profits sagging for want of new investment opportunity.

The low interest rate environment that prevails currently in the wake of expansionary policies pursued by the global central banks also provides an avenue for cheap financing, giving them the leeway to chase deals.

That said, anti-trust concerns is a major deterrent, as governments try to protect sovereignty, citizens, shareholders and consumers from a monopolizing environment.

Thus, companies make hay when the sun shines, creating ripples on the M&A front. With two more months to go, the year 2016 might take honor of being the sweet spot in deal activity.