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Unsolicited M&A Offers At Highest Level Since 2008

Unsolicited and hostile M&A offers are at their highest levels in both dollar and percentage terms since 2008, points out a recent Bloomberg report.

Bloomberg, in its Mergers report dated June 16, 2014, notes that more and more uninvited guests are enlivening the global M&A party.

Assertions from buyers

The Bloomberg report points out that so far this quarter, 38% of all deals globally by value have been unsolicited or hostile. The report highlights that this is the highest level in dollar terms and percentage terms since 2008, when BHP Billiton Limited (ADR) (NYSE:BHP) (LON:BLT) made an unsuccessful attempt to acquire rival miner Rio Tinto plc (ADR) (NYSE:RIO) for $115 billion.

Moreover, Belgian brewer InBev NV too launched an unsolicited bid for Anheuser-Busch Inc, which was ultimately worth $60.8 billion when it closed.

As can be deduced from the following graph, hostile and unsolicited bids have averaged 27% per quarter since 2006, touching a peak of 56% in the first quarter of 2008 and 50% in the first quarter of 2006. However, the rate bottomed out in 2008, where the rates were 5%, 3% and 1% respectively in the first three quarters:

The Bloomberg report notes attention has focused this spring on surging deal volumes, which have finally broken out of the narrow range of the prior four years. Throughout that span, the conditions aiding such a surge were cheap debt financing, cash-rich balance sheets and slow organic growth that would motivate acquisitions.

Unsolicited and hostile M&A bids in 2014

The following table captures the largest unsolicited and hostile bids in 2014:

Unsolicited and hostile bids in 2014 M&A

The Bloomberg report notes that only a handful of companies have escalated offers from unsolicited to hostile, bypassing the target’s board, as Endurance did.

The report cautions that acquiring a company without access to its internal records is risky

Turning its focus to last week’s deals, the report points out that at $43 billion, last week’s global M&A deal volume was less than $50 billion for the third week running.

Lower deal making M&A

The Bloomberg report also highlights the following top 25 M&A deals announced between June 7th and June 13th:

Top 25 deals of the week M&A

The table below highlights some of the significant actions by activist investors last week, including the takeover attempt of Allergan by Valeant Pharmaceuticals:

Significant activist actions M&A

The Bloomberg report also highlights the deal arbitrage in the recently announced deals:

Deal arbitrage M&A