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M&A optimism at a five-year high

Monday, April 13, 2015 - 02:25

Following a spate of billion dollar deal announcements, a new survey by consultancy EY has found appetite for mergers and acquisitions is at a five-year high. As Kirsty Basset reports, it’s a sign of increasing optimism about the global economy.

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Kraft and Heinz in a $46 billion deal. Fedex buying TNT for $4.8 billion. Shell and BG Group, announcing the biggest deal in the oil and gas industry in over a decade. Mergers and acquisitions are making headlines. And according to a new report by EY, there's more to come in 2015, after years of stagnation in the industry. Pip McCrostie is EYs Global Vice Chair for Transaction Advisory. (SOUNDBITE)(English) EY'S GLOBAL VICE CHAIR OF TRANSACTION ADVISORY SERVICES, PIP MCCROSTIE, SAYING: "M&A is a sign that there's growth coming back into the economy. So I think we all know we're in for a period of relatively low growth. But shareholders need to create value. So the businesses need to create shareholder value and maintain their competitive position and they need to grow it." Of the companies surveyed, 56 per cent intend to acquire in the next 12 months, affecting almost every sector. One of the factors driving activity, at least in the mid-size deal region, is innovation, as technology and customer preferences change. (SOUNDBITE)(English) EY'S GLOBAL VICE CHAIR OF TRANSACTION ADVISORY SERVICES, PIP MCCROSTIE, SAYING: "It's blurring the traditional sector boundaries and converging sectors. A lot of it is being driven by that to reach out and acquire IP, to get new brands, to get into the technology. It's just not an option right now to stand still because your core is changing all the time all around you and reshaping." The survey of 1600 executives in more than 50 countries found confidence in the global economy has surged from 53 to 83 per cent in the last 6 months. But geopolitical risk, currency swings and falling commodity prices are some of the key challenges. (SOUNDBITE)(English) EY'S GLOBAL VICE CHAIR OF TRANSACTION ADVISORY SERVICES, PIP MCCROSTIE, SAYING: "It's a complex and disruptive market and environment that the CEOs have to work in to do their deals. But it's a clear message there is opportunity out there and we are seeing people taking advantage of it." Currency shifts are also creating compelling opportunities though, says IG Market Analyst Chris Beauchamp. (SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "This one's certainly being driven by the strength of the U.S. dolllar in allowing U.S. companies to step in and really do some big deals in Europe, capitalising both on that weak euro and on signs of an economic turnaround." And with the future looking bright for M&A, there's plenty ahead for shareholders to look forward to.

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M&A optimism at a five-year high

Monday, April 13, 2015 - 02:25