After a slow start, global mergers and acquisition activity should pick up in the second half of the year, according to Oxford Analytica.
Global merger and acquisition (M&A) volumes totalled 102.9 billion dollars in the four initial weeks of 2012, the weakest level since 2003, according to S&P Capital IQ and Dealogic.
During the first two quarters of 2011, global M&A deals reached a value of 1.27 trillion dollars, a 34% increase over deal values for the same period in 2010. However, in the last two quarters this fell 875 billion dollars, a 29% year-on-year drop.
The M&A outlook this year hinges critically on the future of the euro-area.
If the crisis is contained, trends seen during the first half of 2011 will resurface. However, in a worst-case scenario of a disorderly default leading to bank failures and a global double-dip recession, M&A activity would slide back towards 2008 levels.
Given global uncertainty, trends seen in the second half of 2011 will continue into the first half of this year. However, M&A deals are set to gain some momentum in the second half of this year, especially if the euro-area crisis is contained.
- The number of cross-border deals is likely to be higher than in 2011.
- More acquirers will come from the emerging markets, while North America and Europe will be the most attractive target regions.
- There will be strong interest in the upstream oil and gas industry — with a special focus on shale gas — as well as natural resources such as copper, iron ore, coking coal and other mining activities.
For details, see M&As set for moderate recovery in 2012