Global merger deals ‘fall in value’

The value of global merger and acquisition deals fell to its lowest level for more than five years during the first half of the year, research shows.

During the first half of 2002, merger and acquisition deals worth 448 billion US dollars (£299.41 billion) were carried out, a 56% drop from the 1,020 billion US dollars (£681.68 billion) seen in the first half of 2001, according to KPMG Corporate Finance.

The group said the drop put the value of global M&As below levels last seen in 1997.

Echoing the global decline UK deals were also down, falling 52% by value and 39% in number to 1,127 deals totalling 70 billion US dollars (£46.78 billion).

The survey found that worldwide activity has been dropping since the first half of 2000, and had fallen further since its report in December, showing the downhill trend had not yet abated.

Stephen Barrett, head of international M&A at KPMG Corporate Finance, said: ‘‘2001 was a year best forgotten by the investment banking community.

‘‘As the first half of 2002 unravels, it seems we have not yet reached the nadir, but towards the end of the year we hope to see some levelling out.

‘‘We are seeing the lowest levels of activity in five years. We had hoped for positive progress in 2002 but we have taken a step backwards.

‘‘However, while the fall-out has been particularly marked in deals over the one billion US dollar (£668 million), the decline has eased off in the mid-market.

‘‘This, coupled with the re-emergence of an IPO appetite, provides evidence of an arresting process.’’

Western Europe fared better than other regions with a 49% drop in M&A activity, compared to 76% in Asia Pacific and 61% in the USA.

The energy and utilities sector dominated the UK’s major deals, and utilities and mining were the only industries not to take a fall in deal numbers during the first six months of the year.

The hardest hit areas were public administration, transportation and arts and leisure.