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Big Deals (August 6) Print E-mail
Friday, 06 August 2010

By Marine Cole

The volume and size of share buyback programs are on the rise so far this year.

Worldwide repurchase programs reached $171.8 billion in 2010, up 75 percent from $97.6 billion for the same period in 2009, according to data provided by Thomson Reuters.

Even so, the number of programs is way down, to 579 from 1096 during the same time period in 2009.

Volume was boosted in part by the recent $5.5 billion repurchase program announced by Russian-based NK Lukoil, which is the fourth largest share buyback program so far in 2010. Lukoil will be buying back shares from ConocoPhillips

In the US, other smaller buybacks approved this week included a $200 million program by chip maker Skyworks Solutions, a $300 million addition to Eastman Chemical's program and a $150 million program by WebMD.

Consumer staples companies represent the top industry for share buybacks in the US with 18 so far in 2010, with a total value of $39.8 billion, followed by high technology and healthcare companies with $26.8 billion and $19.4 billion respectively.

But despite strong year-over-year growth, July was the slowest month for buybacks in the US since March 2002, with total volume of $1.1 billion from four buyback programs.

Elsewhere in the capital markets, the equity markets are getting bolstered in the energy and power sector to the detriment of credit. Year-to-date debt capital markets issuance in the sector is down 46 percent from the same period in 2009 while activity in the equity capital markets has risen 19 percent.

Global initial public offerings of energy and power companies are also on the rise, up six times in 2010, with total IPOs reaching $11.8 billion compared to $1.8 billion for the same period last year. In the debt capital markets, investment-grade debt issuance is down 52 percent, to $143.3 billion from the same time period in 2009.

In mergers and acquisitions, a slew of transactions in the last couple of weeks may be signaling the start of a comeback for global deal-making in the second half of 2010, according to Bloomberg. There have been 787 deals since July 19, with a total disclosed value of $86.4 billion. It is pushing global deal volume above the $1 trillion mark for the year, more than a 10 percent increase over the first seven months of 2009.

After concerns in the first half of 2010 that the European debt crisis would endanger a global economic recovery, companies are now getting more confident as they increasingly hoard cash and borrowing costs fall, Bloomberg added.

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