Monthly M&A Insider - Mergermarket

North America
Rebound Hopes for the Economy
• Americans appear to be wondering whether the slight
rease in the housing market activity, the modest rise
in wholesale sales and five consecutive weeks of gain
on the US stock market could signal a longer-term
improvement. The answer will partly rely on the quarterly
earnings reports expected to be released throughout the
month of April. Goldman Sachs was the first one to give
some rather good news and report better-than-expected
earnings. The following results from other major banks
and consumer brands will give a slight clue whether the
US economy could see an upward shift in the second half
of the year and show whether the recent strong rally on
the US stock market is sustainable.
• While North American M&A activity decreased by volume
in the first quarter comparing to Q4 2008, quarterly overall
deal value more than doubled comparing to the previous
one. The recent acquisition of Wyeth, Genentech and
Schering Plough Corporation alone totaled approximately
$150bn. The Pharma, Medical and Biotech industry
recorded approximately $119bn in deal value during the
first quarter of 2009.
• Although the Financial Services sector is seeing modest
encouraging signs, there are lots of remaining issues
to solve before there is an answer as to whether the
worst of the credit crunch of over. Indeed, the threat
of a prolonged recession is still a likely possibility. The
prospect of bankruptcy of General Motors’ is among
the latest to fall victim to the downturn. Looking at the
agenda, on 24 April, a group of seven finance ministers
will gather in Washington for the G7 meeting in efforts to
revive the ailing global economy.
Cash-rich Predators
North America
• M&A activity may see an upswing in 2009 with cash-rich
companies looking to acquire competitors while taking
advantage of the decreasing deal valuations. Pfizer ,
the listed US based global pharmaceutical company, is
spending $43.94bn in cash and $22.88bn in equity to
acquire Wyeth, the listed US based pharmaceuticals,
consumer health care and animal health care products
company, in a move that will produce a premier
biopharmaceutical company with a diversified health care
portfolio. Cisco Systems, the listed US based provider
of networking solutions, which has $23.1bn in cash,
recently acquired Pure Digital Technologies, the US based
manufacturer of camcorders, for $590m. More recently,
the Microsoft Corporation, the listed US based software
company, which has cash reserves of $20.7bn, has spent
$9m to purchase 3DV Systems, the Israel based threedimensional
video imaging development company.
• Speculation regarding which cash-rich players will be next
to announce acquisitions continues. IBM Corporation,
the listed US based information technology company, has
recently dropped out of talks with Sun Microsystems, the
listed US based provider of industrial-strength hardware,
software and services, to acquire the company leaving its
$12.7bn in cash reserves intact to spend on other targets.
Johnson & Johnson, the listed US based manufacturer
of health care products, as well as a provider of related
services, for the consumer, pharmaceutical, and medical
devices and diagnostics markets, is also reportedly
looking to make a number of acquisitions in the near
future. The company has $4.7bn in cash to spend. It
has recently acquired Mentor Corporation, the listed US
based company engaged in manufacturing, developing
and marketing science-based products for the aesthetics
specialties fields, which specializes in breast implants, for
$1.1bn. Other firms that may be looking to buy include:
Apple, the listed US based technological company, which
has $25.7bn in cash, while ExxonMobil Corporation,
the listed US based energy company, is free to spend
$25.4bn of its cash reserves.
Monthly M&A report – 12