Daily Management Review

M&A deals reached an eigth-year record


06/22/2016


Last year's growth of cross-border mergers and acquisitions has increased global flows of foreign direct investment to $ 1.76 trillion. The index peaked since the financial crisis of 2008-2009., according to United Nations’ study.



Foreign direct investment in 2015 increased by 38% compared with 2014. The reason for this became corporate transactions, which are accompanied by significant movement of capital in the balance of payments, particularly tax inversions. Thus, there is only a small change in the actual transactions, according to the annual World Investment report of the United Nations Conference on trade and development.

M&A cross-border transactions rose to $ 721 billion in 2015, compared with $ 432 billion in 2014. The largest of them was a deal for Actavis Plc’s merge with Allergan Plc, which is worth $ 68 billion. The second place is occupied by a German pharmaceutical concern Merck KGaA with Sigma-Aldrich Corp. company for $ 17 billion. The third-largest deal is an exchange of assets between the British pharmaceutical company GlaxoSmithKline and the Swiss Novartis, in which GSK sold its cancer treatment business Novartis for $ 16 billion.

Excluding these major transactions, global foreign direct investment flows have increased by 15%, according to a UN report.

Low commodity prices limited the inflow of foreign direct investment in Africa and the Middle East. It amounted to $ 54 billion, an increase of 7%. At the same time, investment in developing countries of Asia increased by 16% to $ 541 billion, the UN said, adding that investment growth was supported by strong economic performance in East and Southeast Asia.

Falling commodity prices and slowing demand have kept investment flows to Latin America and the Caribbean, with the exception of offshore financial centers. The figure was $ 168 billion.

According to UN estimates, foreign direct investment flows will decline by 10-15% this year due to the instability of the world economy, stable low aggregate demand, low growth in some countries, exporting commodities, as well as due to increase of efficiency of measures against tax inversions.

source: bloomberg.com






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