* 2016 was third-biggest year for M&A on record
* Global M&A volume fell 17 pct to $3.6 trln vs 2015's
* China outbound cross-border M&A a record $221 billion
* Transformative deals include AT&T's Time Warner buy
By Lauren Hirsch and Pamela Barbaglia
NEW YORK/LONDON, Dec 29 A telecommunications
carrier seeks to become a TV network and movie studio owner. A
major software company acquires one of the world's largest
social networks. A smartphone maker snaps up a manufacturer of
internet-connected audio speakers for cars. In 2016, mega deals
became ever more transformative.
A drive by some of the world's largest corporations to find
new avenues to expand in the face of anemic economic growth led
to major acquisitions in areas adjacent to their core business.
This helped make 2016 the third-biggest year on record for
mergers and acquisitions, trailing only 2015 and 2007.
"Companies are reinventing themselves, looking at their
business in a new way with regards to how can they be a
disrupter, and how they can prevent being disrupted - and this
opens up deal flow" said Chris Ventresca, global co-head of M&A
at JPMorgan Chase & Co.
Among these transformative deals was this year's biggest -
U.S. telecommunications company AT&T Inc's $85.4 billion
agreement to acquire media company Time Warner Inc, the
parent of CNN, TNT, HBO and the Warner Bros movie studio.
Other such deals included software behemoth Microsoft Corp's
$26.2 billion acquisition of professional social media
network LinkedIn Corp, and Samsung Electronics Co Ltd's
$8 billion deal to buy car electronics maker Harman
"The pace at which technology is impacting industries and
the convergence between more traditional industry sectors have
never been more on the forefront of people's minds," said Cary
Kochman, head of North American M&A at Citigroup Inc.
Global M&A volume in 2016 fell 17 percent from last year's
record to $3.6 trillion, while the number of deals remained
almost flat at 44,688, according to preliminary Thomson Reuters
Despite heightened geopolitical uncertainty around the
world, which was exacerbated by surprise events including
Britain's vote to leave the European Union and the election of
brash political outsider Donald Trump as U.S. president,
cross-border M&A accounted for nearly 40 percent of total M&A
activity, as companies continued to push for growth beyond their
"It's been impossible to look at a deal without considering
political instability as a result of yet another referendum or
election," said Luca Ferrari, head of M&A in Europe, the Middle
East and Africa at Bank of America Corp.
German drug and crop chemical maker Bayer AG
announced its $66 billion takeover of U.S. agrochemicals company
Monsanto Co, while ChemChina signed a $43 billion
acquisition of Swiss seeds group Syngenta AG, as
consolidation in the sector intensified.
China outbound cross-border M&A, nearly a third of which was
in the United States, totaled $221 billion, more than double the
record of $109 billion set last year, as the Asian powerhouse
pressed on with its grab for resources. Deal value of Chinese
acquisitions in the United States jumped 841 percent this year
"Asian companies have shown more determination in pursuing
deals, and this is mainly driven by their need for global scale
and acquiring expertise they don't have," said Gilberto Pozzi,
co-head of global M&A at Goldman Sachs.
As always, several transactions were driven by a push to add
scale or find cost synergies. These deals included Canadian gas
pipeline operator Enbridge Inc's $28 billion purchase
of Spectra Energy Corp and the $65 billion-plus merger
between industrial gases groups Linde AG and Praxair
"Many of these deals were straight-out consolidation, a
quest to get out there and solidify positioning," said Robin
Rankin, co-head of global M&A at Credit Suisse Group AG
To be sure, not all announced deals are guaranteed to close,
as regulators and politicians have increased scrutiny following
the latest wave of consolidation.
Pfizer Inc abandoned its $160 billion acquisition of
Ireland-domiciled pharmaceutical peer Allergan plc, the
biggest tax inversion ever attempted, after the U.S. Treasury
unveiled new rules to curb inversions.
In another example, office supply chain Staples Inc
and smaller rival Office Depot Inc called off their
planned $6.3 billion merger after a U.S. federal judge blocked
it on antitrust concerns.
Both deals had been announced last year.
"In 2015, companies became very aggressive in pursuing
strategic consolidation where they felt an imperative to do so,
and in that context were willing to stretch the envelope from a
transaction risk perspective," said Gary Posternack, global head
of mergers & acquisitions at Barclays Plc.
The value of withdrawn M&A deals worldwide in 2016 stands at
$804 billion, as more companies came up against such obstacles.
"You can't place all your bets on the largest deals, you are
going to be wrong more often than not," said Marc-Anthony
Hourihan, co-head of Americas M&A for UBS Group AG.
Not all attempted deals made it to the board room either, as
the stock market rally raised valuation expectations and made it
more difficult for buyers and sellers to agree on a price.
An attempt by U.S. social media company Twitter Inc
to explore a sale ended unsuccessfully, while U.S. industrial
conglomerate United Technologies Corp rejected a $90.7
billion offer by rival aerospace supplier Honeywell
(Editing by Greg Roumeliotis and Matthew Lewis)