June 9 - Breakingviews columnists discuss the latest Merger Monday deal announcements and identify signs that the M&A market may be overheating.
Merger and acquisition activity globally up. Nearly two says this -- over the last it's a huge deals before we -- -- rough that merger Monday deals today. It had seemed rove as if this was kind of a sensible led event and a mountain known for them then maybe check. Series sub Merck paid around three times the share price for Biotech. Right to this at 200% premium that seems kind of that they develop the -- -- it -- -- copy edit that it ended there are a lot of reasons why did this they're all a -- worries them I mean first -- there's -- bidding war seems like. On the second one was there based on revenue synergies they think that if they get this back -- drug plug it into their other drugs and while on -- that -- just kind of take island take -- completely unplug and pray you always have to. I think you know so that certain signs of -- bidding wars -- certainly one of this isn't the only ones and we've we've got tackled -- right which just kind of wrapped up may be wrapped up today after another bidding war you know you've got a lot more hostile deals yet he's got deals that went too far and had to be withdrawn like the Pfizer deal with AstraZeneca. -- for all kinds of signs it's that we started to see also. As you talk about the synergies. I'm getting chewed up more so by the premium whereas -- the build credibility as well right so there's been lots of examples in the west. Caught four to six weeks where it feels like things of kind of shifted into overheated. Right now rove wasn't moving you looked at the few times this this idea that. Quite often acquire is give away too much since then when they Bennett's ability. The targets Cisco they acquire as consumers get down that hasn't been having so much lately and that's its effect the opposite. The markets are warning pretty much most deals required of them by sending last we looked at his -- 5% of the deals inquirer stuff went up. -- that's like mind boggling for people it used to that in the normal thing -- someone else is guilty odds are most he'll start work out some reference. -- I get that that tends to work when you have a very street easy. Bread and butter kind of vertical transaction was what we saw basically from the beginning of 2013 incidents -- the end of 2013 and it was not a lot of it not a lot of new and today it was flat for a number writers but it was those kinds of transactions the buyers -- view it as we've moved in 2014. We're seeing these deals where you know. This the premiums -- exceed the synergies and the stock has since opera continues to go up and that's that's kind of where it. And it's just aren't enough because -- this is should be thinking of the full day. Before they let that he of course there animal spirits as Keynes called them -- it's infecting the market I've seen a bunch of people on Twitter you know it. The -- met -- they got to a 39% premium we should get to a -- percent prayer -- -- -- and you have to think that sports are are kind of thinking the same sort of thing. And the problem is you know the deal when it wouldn't -- to lower as much easier to make the numbers work once it runs valleys it's kind much hurt me one of those periodic comes out of this also is that is the idea that maybe. What that's telling you is that companies were being penalized or are being have penalized for their cash. Which is built up in huge volumes over the last four -- five years now so the point where. Great you're spending. And getting his -- -- -- -- OK maybe you're overpaying but we're just -- -- actually doing something with this money is again part of what the pieces of this I mean you've seen all these tech companies that they've got to not have meant to win earnings that the average revenue growth and investors love that and so companies saying okay well I cash revenue -- retiree -- let's just -- OK -- thanks to look we'll leave it that would disseminate it doesn't. And too badly it is a liberal breaking news you can work.