A flurry of global mergers and acquisitions (M&A) could unfold during the remainder of 2017 after a slow start to the year, according to a new report out today.
Clifford Chance’s latest global M&A update said a “wait and see” approach from firms had congested the M&A pipeline with activity down by nearly a quarter by value, for the first half of the year compared to the six months prior. Chinese outbound M&A for the first six months of 2017 was down 42 per cent on the previous six months.
Guy Norman, global head of corporate at Clifford Chance, said many multinationals continue to observe the “regular flow of geopolitical chaos”, while outbound foreign investment restrictions in China had put “a strong brake” on Chinese investment overseas.
Growing government, antitrust and regulatory barriers in many jurisdictions also added further headaches.
Nonetheless, the rest of the year could see significantly more deal activity, driven by firms’ willingness to spend on technologies and innovation to compete.
“Shareholder voices and activism are leading to corporate break-ups, sales of non-core assets and new acquisitions,” Norman said. “The low-growth environment continues to drive boards to take action, which is promising for activity levels as we head to the year end.”
A number of cross-border deals have been announced recently, including Vantiv’s Worldpay tie-up and Cheung Kong’s purchase of energy metering firm Ista.
The pipeline in China has been strengthening as clarity emerges over regulatory attitude, with Clifford Chance forecasting further China outbound activity in the final months of the year.
Regionally, deal activity in Europe remained healthy for the first half of the year, with Germany continuing to outperform, partly due to strong domestic and inbound activity from the US. In Latin America, Africa and Asia Pacific, deal activity dropped in the first half of the year, while the Middle East recorded strong activity, boosted by rising inbound investment from North America.