US dealmaking hit an all-time monthly record in May, surpassing the previous highs seen during the peak of the dotcom bubble and the zenith of the debt boom that led to the 2008 financial crisis, the Financial Times reported.
The overall value of deals in US-bound mergers and acquisitions activity amounted to $243bn in May compared to $226bn during the same month in 2007 and $213bn in January 2000, the previous biggest and second biggest months respectively, according to Dealogic data.
The data underline how frenzied US dealmaking has become as cheap debt and bullish boardrooms fuel an M&A boom of a size not seen since just before the last two equity market crashes, the FT reported.
Meanwhile, the world’s biggest companies are getting bigger, and near-record levels of dealmaking are helping.
Of the 15 new entries to this year’s global top 100 companies by market value, five joined through mergers and acquisitions or a stock market listing, according to a study from consultancy firm PwC, based on data compiled by Bloomberg.
The leading industries reflected in the survey are the same ones that have dominated the past 12 months in M&A: health care, technology and consumer services.
Actavis Plc, Kinder Morgan Inc., Medtronic Plc and Walgreens Boots Alliance Inc. were among the 20 companies with the largest relative increases in market value in the year through March, the report shows, adding a combined $217 billion to their capitalizations at least partly through multibillion-dollar acquisitions. The survey results also include what’s known as organic growth, for example through increasing sales or opening new stores.
Alibaba Group Holding Ltd., which went public in September with a record $25 billion IPO in the U.S., joined the top 100 list at No. 22, based on companies’ market valuations at the end of March. The Chinese e-commerce giant is the largest of the new entrants, valued at about $205 billion at the time of the survey — and more than $220 billion as of Monday’s close.
Apple Inc. kept its crown as the highest valued company in the world, worth $725 billion at the end of March — almost double its nearest competitor, Google Inc., which bumped Exxon Mobil Corp. into third place. U.S. companies dominate the list, taking seven of the top 10 spots.
“U.S. corporates have more aggressively used their scale and relatively higher valuations to increase their growth through strategic acquisitions,” said Clifford Tompsett, capital markets partner at PwC. “With these advantages, risk appetite and drive, other countries will have their work cut out to compete.”
Of the 20 global firms with the largest drop in market value for the year through March, the top three were energy firms as oil prices fell. Exxon Mobil lost the most, with a $59 billion decline in value. BHP Billiton Ltd. shrunk by $56 billion and BP Plc lost $38 billion in market capitalization. Royal Dutch Shell Plc, fourth on the list, dropping 15 notches on the overall ranking of the world’s biggest companies, may regain some ground next year after agreeing to buy BG Group Plc for about $70 billion in April.
Of the 10 telecommunications companies listed in the top 100 in 2009, the first year the survey took place, just four remain: China Mobile Ltd., Verizon Communications Inc., AT&T Inc. and Vodafone Group Plc. Among those that have dropped off: Telefonica SA, Orange SA, America Movil de SAB and Deutsche Telekom AG.
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