Global mergers and acquisitions have hit the headlines of late due to the value of transactions increasing by a staggering amount – H1 figures by Thomson Reuters revealed that the value of transactions rose by 64 per cent to $2.5 trillion, compared with the same period in 2017, and was the strongest year-to-date period since records began in 1980.
This has since grown to $3.2 trillion so far this year, bolstered last week by spending from North American companies. Such domestic deals included SiriusXM’s $3.5bn deal for digital music provider Pandora Media but its cross-border deals, such as Michael Kors’ acquisition of Versace for $2.2 billion, are proving to be the stars of the catwalk.
As reported by Benchmark International in July, there was an increase in outbound investment from the US throughout the first half of 2018 and the deals conducted last week are evidence that this is continuing in the latter half. In fact, cross-border M&A has totalled $1.3tn in 2018, the strongest since 2007.
There are a number of reasons as to why US cross-border acquisitions have increased, such as the economic environment and cheap debt, but a factor these companies are currently taking advantage of is a surge in the value of the dollar. Reinforced with the low value of pound sterling, this has particularly enhanced the number of cross-border deals conducted, especially with UK targets. For example, Apple’s recent purchase of the UK-based music app Shazam.
Going forward, there should be a further increase in activity between the US and UK, with Coca-Cola’s proposal to purchase Costa Coffee from Whitbread for £3.9bn.
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Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximising solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $5B across 30 industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 13 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.