The M&A spree slows down

The Economist has spotted a slowdown in M&A activity. “An epic spree is petering out. At the current pace, global activity in the second quarter will be down by 11% in dollar value from the first and by 35% from the previous year.” They see a range of issues affecting demand for deals. “Bosses are jittery about Brexit, China’s economy and America’s election. Two further factors are dampening spirits. First, the American Treasury’s decision to squelch the tax-arbitrage deals known as “inversions”: in April it scuppered Pfizer’s giant takeover of Allergan. Second, America’s antitrust regulators are getting tougher: for example, blocking the purchase by Halliburton, an oil-services company, of a rival, Baker Hughes.“ With all the issues in the US markets, maybe CEOs are looking in the wrong place. “Fat profit margins, high valuations, low interest rates, lots of spare cash and stagnant top lines mean American firms still have strong incentives to do deals. Perhaps they will turn their attention abroad.” (VIEW LINK)