$1.68-tn M&As in 2015 nearing dotcom-driven 2000's $1.73-tn record mark

By Money Times

Oct 13, 2015 10:53 PM EDT

Dell's latest acquisition deal to buyout EMC for $67billion is the biggest merger and acquisition (M&A) deal for the US technology sector in 2015 so far. About $1.68trillion worth M&A deals in the US have been announced year-to-date (YTD). The M&As in 2015 with less than three months left is just short of $1.73trillion, the full-year record level for M&As 15 years ago.

More than sufficient surplus availability and low borrowing costs are the prime reasons for high growth in M&A deals this year. M&As take place when companies can't grow organically. Charter Communications acquired Time Warner Cable Inc for $79.25bn  and this deal topped the list of M&As this year so far in the US.

Dotcom bubble-driven year 2000 record of $1.73 trillion worth M&As was overtaken by M&As in 2015 year with sparing three months, according to S& Capital IQ. Rich Peterson, S&P Capital IQ's data guru, said: "The buoyant levels of M&A are reflective of an abundance of corporate cash, low borrowing costs and high stock prices which can be used as consideration for acquisitions."

The high growth of M&A deals comes in the wake of bleak corporate earnings whereas third quarter profits for most of the S&P 500 are expected to drop by five percent, forecasts S&P Capital IQ. The bear phase is expected to result in an environment for deal making including the latest Dell acquisition. 

Companies, which find it difficult to grow organically, are reaching for growth taking advantage of low-interest rate regime in the US, thanks to the US Federal Reserve. 

Marking the biggest takeover in the technology sector this year, Dell is making a mega deal worth $67billion for buying EMC, an IT services major. Michael Dell, the billionaire founder of PC and IT services conglomerate Dell, is set to acquire EMC after negotiating with private equity firm Silver Lake Partners on buying out EMC. 

The biggest M&A in 2015 is Charter-Time Warner deal. The top five M&A deals are --Charter Communications acquired Time Warner Cable Inc for $79.25bn. Kraft Heinz Foods Co acquired Kraft Foods Group Inc for $55.42bn. Anthem Inc bought out Cigna Corp for $50.38bn. Mylan NV acquired Perrigo Co for $34.87bn. Avago technologies acquired Broadcom Corp for $29.81bn. 

The next five included ACE Ltd acquired The Chubb corp for $28.96bn. Aetna Inc acquired Humana Inc for $28.91bn. MPLX LP acquired MarkWest Energy Partners for $20.21bn. AbbVie Inc acquired Pharmacylics Inc for $19.78bn. Energy Transfer Partners acquired Regency Energy Partners for $17.43bn.

Technology analysts term the Dell-EMC deal as old tech merging with old tech in a desperate attempt for growth. Technology M&As valued at $240bn after Dell-EMC deal. This falls short of $390bn in technology M&As in 2000. 

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics