Global mergers touch $1.14 tn in Q1

Ulhas Joglekar ulhasj at bom4.vsnl.net.in
Sun Apr 2 19:02:59 PDT 2000


The Economic Times Online Global mergers touch $1.14 tn in Q1 Patricia Vowinkel NEW YORK 1 APRIL GLOBAL merger volume soared 68 per cent in the first quarter to a record $1.14 trillion, led by a boom in European deal making and the rapid transformation of the technology sector worldwide. In the US, deal volume jumped 64 per cent to $578bn, propelled by America Online’s proposed acquisition of Time Warner, a deal originally valued at $160bn in stock and the second largest merger ever. However, the total number of US deals slumped to its lowest level since the third quarter of 1995 amid a sharp drop in the market value of a number of established "old economy” stocks. The total number of deals fell 14 per cent to 2,433 compared with 2,835 in the year-ago first quarter, based on figures through March 31 provided by Thomson Financial Securities Data. With their market values under pressure, a number of US companies have decided to exit the stock market and go private instead, fuelling a sharp increase in buyouts by managements and investor groups. In the first quarter, US deals where companies were being taken private increased nearly fivefold to $10.3bn, up from $1.88bn in the year ago quarter. "You're seeing more and more of the private equity funds allocate dollars to the technology sector,” said CS First Boston managing director Matthew Harris. Earlier this week, Seagate Technology announced a $20bn transaction that takes No. 1 computer disk-drive maker private and sells its 33 per cent stake in Veritas Software back to Veritas. In the complex deal, an investor group led by Silverlake Partners, will acquire the Seagate business for $2bn, plus it gets $800m in cash back. The investor group includes Seagate management and investment firm Texas Pacific Group. "The other trend that I'm seeing is on the financial sponsor side, continued interest by US financial sponsors for transactions in Europe,” said Meredith Brown, head of the M&A group at law firm Debevoise & Plimpton. These investor groups, which in the past had often acted as leveraged buyout firms, now often prefer to take minority positions in target companies instead, he said. Unfriendly or even hostile tactics also are becoming increasingly popular in Europe as well as in the United States. "The view is you've got to have earnings growth to drive the stock price. If you can't get it organically, then you need to think about buying it and if you can't buy it on a friendly basis then you buy it on an unfriendly basis,” Mr Harris said. — Reuters

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