October hits record high for global M&A
In the last week of October alone, five multi-billion dollar deals contributed to an unprecedented month of mega deals for M&A. In particular, renewed confidence in the US economy has buoyed deal activity, despite the impending presidential election, with over half a trillion dollars’ worth of deals announced globally last month.
Here are the biggest deals which have made October a month to remember for M&A:
GE bets on Oil & Gas recovery
Among the companies preparing for big takeovers is General Electric (GE), whose $25bn acquisition of Oil & Gas services provider Baker Hughes will position GE’s Oil & Gas division as a powerful player in the steadily recovering market. The resulting company is expected to generate more than $32bn in annual revenue, will trade on the NYSE and despite retaining the Baker Hughes name will be led by GE executives. Over the past decade GE CEO Jeff Immelt has led $14bn worth of Oil & Gas acquisitions, transforming the company into a major player in the sector.
Qualcomm buys rival NXP for $47bn
American semiconductor and telecommunications equipment company Qualcomm’s $47bn acquisition of NXP is the largest deal to date in the semiconductor sector. Expected to finalise by the end of next year, the deal will create a company with a potential market worth of $138bn by 2020. By joining forces with the Dutch global semiconductor manufacturer, Qualcomm’s new offering is expected to generate more than $30bn in annual revenues. Previously, the largest transaction in the sector was the 2015 purchase of Broadcom by Avago for $37bn.
British American Tobacco plans mega merger with Reynolds
The largest foreign deal by a British company in recent years, British American Tobacco (BAT) announced its intention to purchase the remaining 57.8 per cent of its US partner that it doesn’t already own. The deal is a logical step for BAT, as merging with Reynolds will bring the world’s best known tobacco brands together under one roof, including Lucky Strike and Camel. BAT already has a 42 per cent stake in Reynolds, which has helped the FTSE 100 company maintain its stronghold in the American market, establishing its place as one of the world’s largest tobacco companies.
AT&T proposes $85.4bn acquisition of Time Warner
Telecoms conglomerate AT&T’s record-breaking bid for Time Warner follows months of speculation in the M&A rumour mill for the entertainment company. The merger is likely to transform subscription and advertising models, with AT&T’s capability to promote Time Warner’s films and TV shows to its cell phone customers. The deal will provide Time Warner and its assets, including HBO, CNN and Warner Bros., with access to new platforms. In view of Time Warner’s history with failed acquisitions its $103.5bn deal with AOL in 2000 considered the biggest M&A failure of all time, with the announcement generating a great amount of comments and criticism, which will undoubtedly continue as it progresses.
Stay tuned to our blog for M&A news and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.