LONDON, May 5: In a single biggest day of frenzied activity for mergers and acquisitions across the globe Friday saw takeover bids worth a record $200 billion (£100.3 billion) for highly profitable companies worldwide.
According to the Times on Saturday three media bids — in the UK and the US — accounted for at least $80 billion worth of the takeover activity with Microsoft, the world’s biggest software company, seeking a potential $55 billion deal with Yahoo!, the search engine; Thomson Financial offering about $16 billion for Reuters, the news agency; and private equity tabling three separate $6 billion offers for EMI, the troubled music group that is home to Robbie Williams and Coldplay.
Bankers are gearing up for a frenzy of activity. Advisers to Altadis, the Franco-Spanish tobacco group, gathered to evaluate a private equity bid valuing the maker of Ducados and Gauloises at more than $17 billion, while a consortium led by RBS on Friday night presented details of its $98 billion takeover plan for ABN Amro, the Dutch bank.
Friday’s boom in activity followed the busiest week on record for M&A last week. According to Dealogic, the data provider, $284.2 billion worth of bids were announced, including the first successful move to take private a FTSE 100 company after Kohlberg Kravis Roberts, the US private equity group, and Stefano Pessina secured their deal to acquire Alliance Boots for £11 billion.
But UK plc has not only been on the receiving end of bids. It has also been on a spree of its own. AstraZeneca last week snapped up MedImmune, the US biotech group, for $14.9 billion and Barclays tabled an $89.6 billion offer for ABN.
The frenzied corporate activity collectively represents a boom for investment bankers, City lawyers and accountants who are advising on the deals.
Bankers can typically expect to take 0.5 per cent of any successful large deal in advisory fees. But the big money comes in financing the deals, where a typical $10 billion deal can often bump up the total fee pot to $100 million for all advisers.
And there are no signs of the activity letting up, with bankers pointing to huge pipelines of deals including several other imminent approaches for FTSE 100 companies.
With two months of the second quarter left, UBS, the lead adviser to ABN, is top of the M&A league tables moves.”, having advised on $397 billion worth of deals so far this year. Merrill Lynch, sole adviser to the RBS bidding group, is second, while Citigroup and Goldman Sachs rank third and fourth, respectively, according to Thomson Financial. Goldman Sachs ranks as the top M&A adviser globally.
The targets: Microsoft and Yahoo! are in talks about a tie-up to compete with Google. While a takeover by Microsoft, which would value Yahoo! at $50 billion, is unlikely, Yahoo! is thought to be keen to examine a big joint venture or a merger of internet assets.
Reuters, the financial data and news agency, received a takeover approach understood to be from Thomson, its bigger rival. Such an offer would value the group at more than £8 billion after Reuters shares surged by more than a third.
EMI, the music company, received three separate private equity approaches, from Cerberus, Fortress and One Equity. While no value has been given for any of the cash offers, it would have to be more than 260p a share, valuing the group at more than £2.1 billion.
Altadis, the world’s fifth biggest cigarette maker and the owner of Gauloises, received a joint approach from PAI, the French private equity firm, and CVC, its American rival, valuing the group at 12.8bn, higher than Imperial Tobacco's last bid of 12 billion.
A Royal Bank of Scotland-led consortium presented details of a 72 billion bid to ABN Amro. The consortium, which includes Fortis and Santander, met representatives of ABN Friday night to discuss a proposal worth 39 a share.