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By Marine Cole
The M&A world was rocked this past week by the withdrawal of Prudential's bid for AIA, the Asian arm of U.S. insurer American International Group. It brought global withdrawn mergers and acquisitions activity for the year to date to $135 billion, almost double the activity seen in the same period last year, according to data from Thomson Reuters.
The $35.5 billion acquisition bid for AIA would have been the largest M&A deal so far this year. It also would have been the third largest deal on record involving an Asian company.
Banks, including Citigroup, Morgan Stanley, Goldman Sachs, Deutsche Bank, JPMorgan, Credit Suisse, Lazard and Nomura, were also big losers from the withdrawal as they were expected to earn a total of $850 million in M&A advisory fees and underwriting fees on the Prudential/AIA deal. The Blackstone Group was also expected to cash in on some fees.
Other high-profile withdrawn transactions so far this year include a deal between Simon Property Group and General Growth Properties that could have been worth $27.5 billion.
Elsewhere this week, Netherlands-based Royal Dutch Shell's announcement to acquire US oil and gas producer East Resources for $4.7 billion boosted M&A activity in the sector to 15 percent of total global M&A activity and almost 25 percent of mergers involving at least one US-based company in the energy sector.
Acquisitions of US companies by non-US acquirers have accounted for 23 percent of total activity so far this year, up from only 9 percent of total activity for the same period in 2009.
Meanwhile, US domestic M&A is at its lowest level since 2003. This is despite two of the top three global M&A transactions for the week being domestic US deals. Beside the East Resources deal, some of the largest transactions for the week included the planned acquisition of ev3, a technology company specialized in endovascular devices, by Covidien, for $2.6 billion.
In the debt markets, activity in the mortgage-backed securities market is soaring.
With the recent $2.1 billion offering of floating-rate mortgage-backed notes by Fosse Master Issuer, an affiliate of financial services company Alliance and Leicester, global year-to-date issuance of MBS has reached $248 billion, according to Thomson Reuters.
This is the highest year-to-date total since 2007 when issuance reached $695 billion. Year-to-date, offerings are up nearly two-fold from 2009 and 90 percent from 2008 levels.
The US accounts for 77 percent of the total MBS market followed by Belgium and the UK with 6 percent and 5 percent respectively.
Other large debt deals for the week include a $2.4 billion bond offering from China's CITI Bank Corp. and a $2.1 billion covered bond transaction from BMO Covered Bond Trust.
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