The resumption of mergers can boost sustainable actions
Mergers and acquisitions announced this month totaled 200 billion dollars but this is not enough to trigger a sustainable rebound major exchanges, gained by strong fears of a significant slowdown in global growth.
At best, mergers and acquisitions – aided by interest rates fell to record low, stocks cheap and well furnished corporate treasuries – could limit the decline in equity markets, investors seeking to take positions in the securities of potential targets.
Another factor militating against an increase in mergers and acquisitions: the risks of job losses in a context of high unemployment and their possible impact on demand for those same companies.
The slowdown in the United States was confirmed Friday by publishing a revised estimate of GDP in the second quarter well below the previous, or 1.6% annualized 2.4% cons.
The companies comprising the U.S. Equity Index S & P 500, which have cut costs dramatically since the beginning of the economic crisis in late 2007 and early 2008, ended the second quarter with record cash – 1,630 billion dollars in total, according Thomson Reuters Worldscope.
"The balance sheets of companies have seldom been filled," said Alain Bokobza, head of global asset allocation at Societe Generale.
Those companies looking to boost their sales in an anemic economy, have caused turmoil in the month of August, usually the quietest of the year in terms of M & A.
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According to Thomson Reuters data, the transactions announced in August totaled $ 200 billion, the third best month of the year in terms of funds committed.
Among the most important, there are hostile bid from BHP Billiton on the Canadian Potash (39 billion dollars), the supply of Intel on McAfee ($ 7.7 billion) and equity of Vedanta Resources for 9.6 billion in Cairn India.
Added to the battle waged between Hewlett-Packard and Dell to capture 3PAR, offers now reached two billion dollars.
If at this stage this year, the total amount of M & A is greater than 20.6% that of 2009, it is less than half that of 2007 when stock markets were up sharply.
The crisis of sovereign debt in the eurozone and the return of concerns for global growth have saddled the equity markets and boost bonds whose yields have fallen to record low.
"For now, the dominant factor for the markets is the slowdown in growth in the United States and China," said Alain Bokobza, who notes that mergers and acquisitions are mostly limited to the mining and technology sectors.
Analysts point out that if the transaction amounts are significant, they were few in August – 1863 against 2961 in August 2009.
According to the professionals interviewed, the new wave of M & A reflects a concern among companies on the growth of their sales and also raise fears of negative effects on the employment situation.
"When I hear 'M & A', I think loss of jobs," said Kim Caughey, analyst at Fort Pitt Capital Group in Pittsburgh.
"When you see the size of current acquisitions, I would not be surprised to see unemployment rise," he added.