Merger mania: the sequel Featured

9:58am EDT July 22, 2002

If you have a hunch that last year seemed like an unusually busy year for the M&A people , you’re right. According to CFO magazine, 1998’s $1.7 trillion dollar volume of deals announced (not closed) nearly doubled 1997’s all-time record. Leading the bunch was the Exxon/Mobil deal, valued at $77.2 billion. Second-largest was SBC Communications’ intended purchase of Ameritech, valued at $61.4 billion (and still in the regulatory waiting room). BP America’s purchase of Amoco was fourth, at $48 billion.

Other announcements that had a local effect—such as Rubbermaid and BFGoodrich—didn’t even crack the top 10.

Here, according to CFO, are some notable facts about last year’s extraordinary roster of transactions:

• The $661 billion worth of deals in the second quarter alone was higher than any full year in history except 1997.
• After nine years as the largest buyout in history, the KKR/RJR Nabisco deal of 1988-89 was surpassed by eight different deals in a 90-day period.
• Nine of the 10 largest deals ever were recorded in 1998.
• While the overall number of transactions didn’t grow in 1998, 46 percent of them were worth $1 billion or more.

It would be mindboggling to assume that 1999 could set yet another record, but the year did get off to a fast start with Ford’s announced plan to buy Volvo. Plus, the economists CFO talked to say that “all the key drivers of the M&A market remain in place.”

Those include:

• Increasingly global markets
• Earnings pressure resulting from declining currency values overseas
• Global over-capacity in certain critical industries, such as automotive
• Perhaps some concern about Y2K compliance.