Just one and a half months into 2013 and it already appears as
though 2013 will be the year of an M&A boom. Analysts have been
calling for a surge in mergers and acquisitions for years now, due
to cheap financing rates.
However, now that the equity prices have risen to new multi-year
highs, sellers are beginning to feel more confident that they are
not selling at bargain basement prices. As long as prices remain
strong and financing cheap, 2013 could very well be the year of the
Already in 2013, the 10 biggest deals have totaled nearly $90
billion. In 2012, the ten biggest deals totaled a mere $71.25
billion, showing that this year is already set to smash 2012. Also,
the biggest deal this year, Warren Buffett's Berkshire Hathaway
(NYSE: BRK-A) (NYSE: BRK-B) buying H.J. Heinz Company (NYSE:
) for some $28 billion.
Buffet's purchase of Heinz was not a normal Buffett deal,
though. Buffett partnered with private equity firm 3G Partners in
the deal and, unlike many Buffett purchases, the deal involved a
significant amount of leverage. Buffett's move into debt financing
for deals shows the true underlying strength of the M&A market,
especially as he is one of the more conservative investors in the
market who rarely likes to use leverage in buyouts.
So far through just one and a half months of 2013, the top ten
deals have surpassed the top ten deals of 2012. They are:
H.J. Heinz (NYSE:
) is being sold to Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B)
and 3G Partners for $28 billion.Dell is in final discussions to go
private in a $24.4 billion management buyout. Virgin Media (NASDAQ:
) was sold to Liberty Global (NASDAQ:
) for $23.3 billion. Copano Energy (NASDAQ:
) was sold to Kinder Morgan Energy Partners (NYSE:
) for $5 billion. Acme Packet (NASDAQ:
) was sold to Oracle (NASDAQ:
) for $2.1 billion. Metals USA Holdings (NYSE:
) was sold to Reliance Steel (NYSE:
) for $1.2 billion. Crexus Investment Corp. (NYSE:
) was sold to Annaly Capital Management (NYSE:
) for $996 million. MAP Pharmaceuticals (NASDAQ:
) was sold to Allergan (NYSE:
) for $958 million. Zipcar (NASDAQ:
) was sold to Avis Budget Group (NASDAQ:
) for $500 million.
Notably in those ten deals are the three mega deals already to
have taken place this year. With cheap financing, high equity
prices (meaning an increased willingness for owners to sell), and a
healthy M&A market, more deals could come. One notable deal
that has been rumored for nearly one year is the management buyout
of Best Buy (NYSE:
). Over the summer, sources thought a deal was close only for
discussions to break down.
It is important to note that the recently announced management
buyout of Dell is not closed yet and is facing lots of shareholder
rebuffs. Notable activist investor Southeastern Asset Management
said it would vote its shares against the deal and other
institutional shareholders have joined the chorus of those against
the deal in recent weeks. The final vote will determine whether the
deal goes through.
It should also be pointed out that added to the list of
acquisitions should be the merger of American Airlines (
) and United Airlines, which together creates the largest airline
in the U.S. Once again, the cheap financing, the good selling
prices and a health M&A market should make 2013 the year of the
mega deal. So grab your popcorn, because this is going to be one
heck of a show.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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