Global M&A falls in 2008

By Jessica Hall

PHILADELPHIA (Reuters) - Global merger volume dropped by almost a third in 2008, ending five years of deal growth as a lack of available credit, plunging stock markets and a worldwide financial crisis undermined companies' ability to make acquisitions.

Global merger volume totaled $2.89 trillion, marking the lowest annual volume since 2005, based on preliminary data from Thomson Reuters.

In perhaps the most dramatic sign of how troubled the M&A market was this year, a record number of previously agreed deals -- over 1,100 -- were canceled.

"The thing about the last 12 weeks ... the world has completely changed," said Howard Lanser, director of mergers and acquisitions at investment bank Robert W. Baird.

In the fourth quarter, merger volume plunged 44 percent, making it the lowest quarterly volume since the third quarter of 2004, Thomson Reuters data showed.

Among the deals to collapse this quarter was the largest-ever leverage buyout as BCE Inc failed to pass a solvency test and a $28.3 billion purchase by a group of private equity firms fell apart.

Mining company BHP Billiton scrapped its $66 billion takeover for rival Rio Tinto in November, while Huntsman Corp terminated its $6.5 billion deal to be bought by Apollo Management's Hexion Specialty Chemicals Inc.

A year that saw two U.S. investment banks collapse and two forced to convert into bank holding companies to survive, also saw upheaval in the M&A rankings.

Goldman Sachs Group Inc maintained the top spot among global advisers and in the U.S., but JP Morgan Chase & Co clinched a surprise No.1 spot in Europe due to its involvement in mega-deals such as InBev NV's purchase of Anheuser-Busch Cos Inc.

Goldman Sachs's key rival, Morgan Stanley, was ranked fifth globally, down from No.2 a year ago. The firm ranked only eighth among U.S. advisers and seventh in Europe, according to Thomson Reuters.

Deal volume fell in most major regions in 2008, with only China and Brazil showing gains -- of 25 percent and 93 percent, respectively.

U.S. volume for 2008 plunged 38 percent from a year ago, while fourth-quarter volume slumped 55 percent. In Europe, 2008 volume dropped 29 percent, and Asia Pacific's annual volume fell 12 percent.

HOSTILE INTENTIONS

In an otherwise stormy climate, one bright spot was hostile deal activity, with the U.S. seeing the most unsolicited bids since 1999.

Unsolicited deals, in which one company makes an uninvited takeover bid for another, included InBev's $60.4 billion acquisition of U.S. brewer Anheuser-Busch.