ABBL

Hostile M&A peaks in 2010 as governments step-in to protect assets

The volume of global hostile M&A reached its highest point for more than four years in 2010 forcing governments to use existing legislation to impose protectionist measures more liberally, according to the latest Allen & Overy M&A Index1.

The hostile bid and restrictions on foreign investments in strategic sectors were key talking points in 2010. In reality only limited new laws came into effect and the global rush to secure energy and power assets drove some nations to use existing investment laws to prevent takeovers, stretching the definition of “strategically important” assets to ward off unwanted acquisitions of precious national targets.

Other highlights include:

• The emerging economies of Brazil, Russia, India and China continue to drive cross-border M&A, both inbound and outbound, and the energy and natural resources sector remains the most attractive to bidders in all major markets.
• We are seeing a resurgence in life sciences, TMT and financial services, and we expect more activity in 2011 as the banking sector digests the fine print of new regulations and major players move forward with reorganisations and disposals."
• The sovereign debt crisis has dented confidence in some major markets, but has so far done little to materially damage the return of transactional activity in financial services. The spectre of further bank nationalisations and the disposal of 'bad bank' assets will, in due course, undoubtedly lead to further financial services M&A as buyers are sought.

The research reveals that there were 967 global asset/subsidiary sales in 2010 worth over USD780bn, the greatest volume since 2007 and a 34 per cent increase on 2009 totals. The number of mergers, the combination of two or more businesses into one with broadly equal holding and governance rights, was higher than at any point in the last four years (a total of 29 in 2010 compared with 21 in 2007) and, in 2010, represented a 60% increase in Q4 2010 when compared with Q4 2009. Despite a 66% increase in the total volume of take privates in 2010 (vs. 2009), total volume was still less than half that of 2007 (a total of 118 global take-privates).

For a full copy of the Allen & Overy M&A Index report and/or to arrange interviews please contact us by email or phone. For more information, do not hesitate to visit our website - www.allenovery.com

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1 The M&A Index provides market insight and commentary by Allen & Overy partners, backed up by independently commissioned quarterly research on the volume and value of global M&A deal types (USD100m+).

(Source: Allen & Overy)