16 May Deal with it: the M&A slow-down
A few big transactions are still under way, such as Bayer’s potential $47 billion bid for Monsanto, a seed and pesticide firm. But an epic spree is petering out. At the current pace, global activity in the second quarter will be down by 11% in dollar value from the first and by 35% from the previous year. Bosses are jittery about Brexit, China’s economy and America’s election. Two further factors are dampening spirits. First, the American Treasury’s decision to squelch the tax-arbitrage deals known as “inversions”: in April it scuppered Pfizer’s giant takeover of Allergan. Second, America’s antitrust regulators are getting tougher: for example, blocking the purchase by Halliburton, an oil-services company, of a rival, Baker Hughes. Fat profit margins, high valuations, low interest rates, lots of spare cash and stagnant top lines mean American firms still have strong incentives to do deals. Perhaps they will turn their attention abroad.