Hostile Bid The Highest Since 1999

As reported at the Financial Times, unsolicited bids for companies are running at their highest level in nearly a decade as companies use built-up cash, and in some cases a weaker dollar to acquire other companies. Data from Dealogic shows that since the start of the year, unsolicited bids have accounted for 19% of global mergers and acquisitions. This is the highest this number has been since 1999. As mentioned by the co-head of global M&A at Deutsche Bank, “The lack of credible white knights and activist shareholders pushing for quick resolutions and financing available for strategics is also fueling the high number of unsolicited bids”. Of interest is that the success rate of hostile deals has also increased, with only 31% of such deal failing in 2008, compared to an average failure rate of 42% since 1997. Apparently, activist like Carl Icahn are having an impact, Microsoft-Yahoo notwithstanding. On the other hand, given issues in the credit market, it could be that current deals going forward are more likely to have financing already in place and only include stable companies, thereby making a successful deals more likely. This news certainly provides a little better risk-reward for those trading on M&A news.