M&A: The deals strengthen in the first quarter of 2015

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04/01/2015 | 03:45 pm
The overall activity of mergers and acquisitions worldwide has experienced its strongest start since 2007, recording in the first quarter 2015 a total of $811 billion, an increase of 21% compared to the same period in the previous year.
The following graph shows the sectoral distribution of the transactions:


 
The health sector leads the field (AbbVie / Pharmacyclics for $21 billion), followed by real estate (Simon Property Group / Macerich for $21.1 billion) and telecom (Hutchison Whampoa / Telefonica for $15.5 billion). Thus, it is the energy sector that gave way its place on the podium to real estate at the start of this year.
 
Furthermore, the largest deal in 2015 to date is the giant Kraft Foods takeover by Heinz, controlled by the Brazilian investment fund 3G and the holding company of billionaire tycoon Warren Buffet. The transaction amounted to $36.6 billion will create the third largest food and beverage company in the US and the fifth worldwide.
 
Capital operations carried out since the beginning of the year highlight three specific aspects of M&A market in 2015, namely the predominance of large deals, the concentration of operations in the US and the increased role of independent financial advisors.
 
In 2014, M&A had made their comeback by posting a 7-year record, taking advantage of more favorable market conditions, as explained in our previous article (The momentum of M&A in 2014). Nevertheless, these transactions represented only 5% of the total valuation of companies, against a ratio of 8% during the previous peaks. A study conducted by the investment bank Citi and unveiled recently affirms that deals should regain their historical correlation with the market capitalization, and reach 4,000 billion dollars in 2015.  


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