US deals drive M&A surge

Bloomberg

After a dismal December, dealmakers made a comeback in January, logging $275 billion of mergers and acquisitions globally to mark the best start to a year in almost two decades.
“M&A came back even though the markets felt choppy, and that shows how confident CEOs are,” said Susie Scher, co-head of the global financing group at Goldman Sachs Group Inc.
The surge was led by North American deals, with $187 billion of transactions announced during the month — up 40 percent from 2018 — according to data compiled by Bloomberg. Asia was next with $47 billion, an increase of about 10 percent from a year ago, while in Europe M&A volumes fell about 24 percent to $30.5 billion, the data show. In the US, Bristol-Myers Squibb’s purchase of Celgene Corp. alone, valued at $89 billion including debt, made sure December’s $52 billion total was surpassed on the third day of the year.
You’d have to go back all the way to 2000 to find more M&A announced in the first 31 days of the year globally. That’s when the biggest deal on record — Time Warner Inc.’s merger with America Online Inc. for $186 billion including debt — catapulted the monthly total to almost $410 billion.
Goldman’s Scher is expecting a solid year for M&A as investment grade financing markets — where blue-chip companies such as Bristol-Myers raise debt for funding acquisitions — recovered from a downbeat December and debt investors show a greater willingness to lend to riskier companies.
“Could you see $70 to $80 billion of bonds sold globally for an investment-grade deal? Absolutely,” she said. “In the high-yield market there’s capacity for $20-billion deals globally across bonds and loans.”