Success rate of M&A offers at a two year high
08 March 2010
The chances of a takeover approach leading to a completed M&A deal is at its highest level in over two years as the appetite amongst bidders revives, according to research by EMW Picton Howell, the commercial law firm.
Around 85% of all takeover approaches to AIM and fully listed companies concluded in successful deals in Q4 2009 compared to a low of just 42% of bid approaches in Q1 2009, according to the figures.
EMW Picton Howell, the London and Milton Keynes-based firm, says that the 34 completed M&A deals in Q4 2009 was the highest number of completed M&A deals targeting UK listed companies in two years.
Teja Picton Howell, Principal, of EMW Picton Howell, said: “The M&A market has undergone a complete sea change - buyers are now willing to keep increasing their offers to ensure their offer gets approved by the targets board.”
He added: “A year ago a lot of takeover talks started and ended with a speculative low ball bid with the acquirer unwilling or unable to raise their offer price. With Kraft’s recent bid for Cadbury the desire to complete the deal was strong enough for Kraft to increase their bid even without the support of their biggest shareholder – something that few CEOs would have had the nerve to have done a year ago.”
Mr Picton-Howell says that the increase in M&A activity is not purely due to the ambitions of senior corporate executives and their investment bankers.
"As the economy moves out of recession more companies are going to come under pressure to deliver earnings growth, but with the economy still weak many companies will decide that only M&A can deliver that necessary boost to earnings", he said.