Glencore International Plc’s $41 billion purchase of Xstrata Plc, the biggest takeover in almost three years, may help restore confidence in dealmaking amid evidence global economic turmoil is subsiding.
Glencore’s proposed takeover, the biggest mining transaction ever, is the latest sign executives are becoming bolder after mergers and acquisitions in January slumped to the lowest level since August 2009, the slowest start to a year in almost a decade, according to data compiled by Bloomberg.
Technology takeovers may again boost M&A this year as companies such as Cisco Systems Inc. hunt for acquisitions that will increase their capacity to provide new storage, analytics and security services to enterprise customers. Hewlett-Packard Co., Google Inc. and Microsoft Corp. led a 38 percent gain in technology deals last year, outpacing an advance of about 3.7 percent for all of M&A worldwide, Bloomberg data show.
“M&A activity is certainly on an upward trend from a desperately low level late last year,” said Will Jackson-Moore, U.K. transactions leader at PricewaterhouseCoopers in London. “Still, corporations are showing a lot of restraint and they will remain very selective about opportunities. They want to protect their balance sheets, which is one of the reasons balance sheets are as strong as they’ve ever been.”