2014 could end up going down as the year of the mega-merger. The year got off to a fast start, with three mergers totaling nearly $114 billion in just one week in February.
These included Comcast’s mammoth $69.8 billion purchase of Time Warner Cable — the 10th largest M&A deal in U.S. history, based on total transaction volume — followed by Actavis’ $25.3 billion acquisition of Forest Laboratories. The next day, Facebook acquired WhatsApp for $19.4 billion (including restricted stock), which was the fifth-largest tech merger ever.
Merger experts say that the booming stock market and expectations for an improving economy are two of the main reasons for merger mania this year. The economic environment in 2014 has been the best for mergers since the financial crisis began, they point out. As a result, the pent-up demand for acquisitions that had built up over the past few years exploded in a wave of mega-mergers, as companies flush with cash put it to use buying other businesses to expand and benefit from mutual synergies.
Top 10 M&A Deals of the Year
According to Forbes, the 10 largest announced mergers in the U.S. in 2014 were as follows:
- Comcast Corporation acquires Time Warner Cable Inc. — This $69.8 billion merger between two of the largest cable TV companies in the world was announced on February 13. The deal has been approved by shareholders but is awaiting regulatory approval.
- AT&T Inc. acquires DirecTV Group Inc. — This $67.1 billion merger between two more communication and TV giants was announced on May 18. The deal has also been approved by shareholders but is awaiting regulatory approval.
- Medtronic Inc. acquires Covidien plc — This $46.8 billion merger between medical device technology companies was announced on June 15. The deal is awaiting both shareholder and regulatory approval.
- Holcim AG acquires Lafarge SA — This $46.8 billion merger of cement companies was announced on April 7. The merger is expected to be finalized by mid-2015, creating the world’s largest cement manufacturer.
- Actavis plc acquires Forest Laboratories Inc. — This $25.3 billion merger between pharmaceutical companies was announced on February 18 and completed on July 1.
- Altice SA acquires Societe Francaise du Radiotelephone SA-SFR — This $23.6 billion merger between telecommunications companies was announced on March 11.
- Facebook Inc. acquires WhatsApp Inc. — This $19.4 billion merger between social media companies was announced on February 19 and completed in October.
- General Electric Co. acquires Alstom SA — This $17.1 billion acquisition by GE of a French engineering group was announced on April 30. The deal was approved by the French government in November and should close by mid-2015.
- Kotobuki Fudosan K.K. acquires Beam Inc. — This $16 billion merger of spirits and beverage companies was announced on January 13 and completed during the second quarter.
- Novartis AG acquires GlaxoSmithKline plc — This $16 billion merger between pharmaceutical companies was announced on April 22. The deal is awaiting regulatory approval.
Looking Ahead to 2015
Next year could be another big year for mergers in the U.S. According to the EY Global Capital Confidence Barometer published in October, the current desire of companies to do mergers and acquisitions is at a three-year high as 40 percent of executives say they expect to pursue a merger or acquisition sometime in the next 12 months. “This is a clear signal of intent to look at deals as a route to growth,” the report stated.
So buckle up: 2015 could be another wild merger ride!