LONDON/NEW YORK: Global mergers and acquisitions (M&A) had their strongest start ever in the first quarter of 2018, totaling $1.2 trillion in value, as U.S. tax reform and faster economic growth in Europe unleashed many companies’ deal-making instincts.
Strong equity and debt markets and swelling corporate cash coffers also helped boost the confidence of chief executives, convincing them that now is as good a time as ever to pursue transformative mergers, dealmakers said.
While the value of M&A deals globally increased 67 percent year-on-year in the first quarter of 2018, the number of deals dropped by 10 percent to 10,338, preliminary data show, reflecting how deals on average are getting bigger.
Among the largest deals clinched this quarter were U.S. health insurer Cigna Corp’s $67 billion deal to acquire U.S. pharmacy chain Express Scripts Holding Co and German utility EON SE’s $38.5 billion deal to acquire RWE AG’s renewable energy business Innogy SE.
M&A volumes doubled in Europe in the first quarter, while the United States was up 67 percent and Asia were up 11 percent.
In the United States, the stock market rally was thwarted in the first quarter by U.S. President Donald Trump’s announcements on trade tariffs on Chinese imports. Corporate valuations are still elevated, but market volatility has increased.
Regulatory risk has also increased. Trump’s dramatic intervention that blocked Singapore-based Broadcom Ltd’s $117 billion hostile bid for U.S. chip maker Qualcomm Inc on grounds of national security earlier this month underscored heightened U.S. concerns about losing out to China in the race for new technologies.
On the antitrust front there is also some uncertainty. The U.S. Department of Justice has sued to block U.S. telecommunications company AT&T Inc’s $85 billion deal to buy media company Time Warner Inc over concerns about how the two companies would consolidate their sectors.