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By Marine Cole
Mergers and acquisitions activity has remained tame so far this year, but could rebound in the second half of the year, in part driven by a rise in private equity activity.
The total value of deals in the US was down 5 percent, to $339 billion, in the first half of the year compared with $358 billion in the first half of 2009, according to data provided by Thomson Reuters. "This could be the worst start of the year since the first half of 2003," which saw $187 billion in deals, Thomson Reuters said.
Globally, M&A activity in the first half of the year was on par with the same period last year.
The largest deal in the first six months was the $27.4 billion acquisition of Carso Global Telecom by America Mobil in Mexico, followed by the $22.2 billion acquisition of Qwest by CenturyLink in the US. Both deals were in the telecommunication sector.
The third largest deal was in the insurance business with the $15.5 billion acquisition of American Life Insurance by MetLife.
Broken down by industry, the energy & power sector saw the most activity in the first half of the year, with $189 billion, or 19 percent of total global activity. It was followed by financials ($135 billion, or 14 percent of total global activity) and telecommunications ($103.8 billion, or 11 percent of total global activity).
In the energy and power sector, the US sawed a majority of the activity with transactions such as the $7.6 billion acquisition of E.ON by PPL.
Financials were the most targeted sector in Europe and Asia Pacific so far in 2010. Europe accounted for 30 percent of the sector and was home of the largest financial deal in the second quarter with the $5 billion acquisition of Cajasur by CAM in Spain.
In the league tables, Goldman Sachs took the top spot in the global announced M&A ranking after ranking number two in the first half of 2009. It's now ahead of JP Morgan and Morgan Stanley.
According to a recent midyear report by Ernst & Young, M&A activity should pick up in the second half of the year. The firm found that 57 percent of approximately 800 senior executives surveyed around the world said they are likely or highly likely to acquire other companies in the next 12 months, almost double that of the 33 percent surveyed in November 2009.
"We're seeing a strong deal pipeline," Rich Jeanneret, Americas vice chairman for Ernst & Young Transaction Advisory Services, said in the report. "As we look towards the second half of 2010, we expect to see well-capitalized corporations and private equity firms continuing to put their money to work in select growth markets."
Private equity surged in the second quarter, even if from very low levels. Global PE-backed M&A totaled $43 billion in the second quarter, up 54 percent from the first quarter of 2010 and up 148 percent from the second quarter 2009.
In the US, year-to-date activity reached $36 billion in the first half of 2010, up 200 percent from the same period last year.
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