M&A teams in investment banks all over London must be salivating at the prospect of a wave of new deals. Acquisitions are back on the agenda.
In many ways it makes sense. Last year many companies re-trenched, rebuilt their balance sheets and hoped for the best. They have been hoarding cash but now wonder if things are getting better. M&A comes in all shapes and sizes so here are some of the different shapes.
The “back-from-the-brink” asset sale is typified by businesses that have stabilised their weaker parts and now want to offload them. Old Mutual falls into this camp with the planned sale of its US life business.
Then there is the “Help, how are we going to pay back our creditors?” asset sale. AIG in the US has been selling assets to pay back the US tax-payer and the Pru deal is a big part of that.
There has been speculation that we might see Barclays do a “we need to rebalance the business” deal. Reports over the past week suggest Barclays could be shopping for a US retail bank. Barclays said it was speculation but seemed to leave the door open.
It is not all about defence, there are some attacking M&A strategies out there too. The “it looks cheap now” deal may gain momentum soon.
International businesses looking at UK and Euro denominated assets will be watching currency markets closely. We don’t know who is interested in the inter-dealer broker Tullett Prebon but a weaker pound could help a foreign bidder there.
In some sectors regulators are changing their tone so we expect the “help - the industry needs this” deals to gain momentum. British Airways and American Airlines would be in this camp. BA says it’s confident it will get the anti-trust immunity it is seeking.
And finally there is the “we can’t get credit” deal. One story of the credit crisis has been the way that credit markets are still open to big companies but SMEs are having a much tougher time. I can see why a small company might be tempted to accept an offer just to access funds.
Anna Edwards co-hosts CNBC’s Europe Tonight.