The value of ‘withdrawn’ global M&A has reached $271bn in the year to date, the highest total since 2008, according to analysis from professional services firm Deloitte.
Excluding pharmaceutical giant Pfizer’s withdrawn $117bn bid for rival AstraZeneca, the figure for withdrawn M&A falls to $154bn.
‘Withdrawn’ refers to instances where the target or acquirer in the transaction has terminated its agreement, letter of intent or plans for the acquisition or merger.
Incomplete blockbuster deals have pushed the proportion of withdrawn deal values to 20% against the long-term average of 15%. The percentage of withdrawn deal volumes remains consistent with previous years, however, with just 3% of announced deals withdrawn this year.
“The unsuccessful Pfizer bid for AstraZeneca accounts for 43% of the withdrawn total value, and is the only deal this year that makes the top 10 of largest global withdrawn deals since 2005,” said Deloitte in a statement.
It continued: “The post-crisis M&A world is made up of two competing forces. On the one hand, market confidence, bolstered by positive economic indicators, is back. At the same time, getting deals completed is becoming increasingly complex. The valuations are picking up and sellers want to get the best for their shareholders. Increased scrutiny requires larger deals, particularly cross-border ones, to consider a wider group of stakeholders. Moreover, under UK takeover code, a reduction in the time for negotiations means bidders need to be better prepared.”
Deloitte expects global M&A deal volumes to surpass those of last year by the end of 2014, but it does not anticipate the bumper year many predicted at the start of 2014.
At present, M&A activity is being driven out of the US, although Europe is catching up fast.
Sally Percy is editor of The Treasurer