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"No Deal" Volume Nearly Equals Deal Volume
The collapse of the BHP-Rio Tinto deal has pushed the value of busted mergers in Q4 to nearly equal the value of the completed deals.
December 1, 2008
Last week’s collapse of the BHP-Rio Tinto deal has pushed the value of busted mergers in the fourth quarter to nearly equal the value of the mergers that were signed, according to Thomson Reuters.
Thomson Reuters tallies BHP Billiton’s offer for Rio Tinto at $188 billion, including the price of the debt BHP would have assumed in a deal as well as the value under the original share price.
This brings the total of abandoned fourth-quarter M&A deals to $322 billion, compared with $362 billion of announced deals. For every 100 mergers or acquisitions announced in the fourth quarter, seven were called off, which illustrates the enormous size of failed deals when compared with those being inked.
And there are some huge proposed deals still in question. The icy credit markets have made it unlikely that Swiss pharmaceuticals giant Roche Holding will find banks willing to underwrite the $45 billion loan it needs to buy the majority of Genentech it doesn’t already own. And the $42 billion takeover of BCE may foiled by an accounting firm’s preliminary opinion that the parent of Bell Canada wouldn’t be solvent after the deal.
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