There were seven hostile takeovers globally in the third quarter of the year with a combined value of $49.1 million (£31.2 million), compared to $4 million for the four takeovers during the same period in 2009 according to the latest M&A Index report by law firm Allen & Overy.
Andrew Ballheimer, co-head of Allen & Overy’s global corporate practice, comments: ‘Hostile takeovers always receive plenty of attention for the wrong reasons, but they can often be a positive indication of market confidence as such high profile and riskier transactions are not undertaken lightly.’
The value of other private M&A transactions rose to $76 billion globally in the third quarter, an increase of 54 per cent on the same period in 2009. Companies disposing of assets and subsidiaries accounted for 40 per cent of overall M&A in the period.
Ballheimer adds: ‘There has been a lot of excitement about a perceived rebound in global M&A over the latter part of Q3, however the reality suggests there has only been a measured improvement as confidence slowly returns.’
The report predicts that the financial services and retail sectors will continue to struggle in the coming months due to a lack of buyers and poor consumer confidence. A continuing mismatch in value expectations between buyers and sellers is also seen as hampering M&A recovery in all regions and sectors.
Richard Cranfield, chairman of the Global Corporate Practice at Allen & Overy, says: ‘What we can look forward to is an upturn in restructuring-led M&A, which is being driven by the refinancing timetable for many of those corporates sitting on highly leveraged balance sheets. A lot of the deals struck under covenant-lite arrangements in the boom are due for refinancing, and we expect more companies to be forced into insolvency or restructuring, even though banks are keen to avoid realising losses.’