The headwinds that plagued the mergers and acquisitions business in 2011 are turning into favorable tailwinds for this year.
"The M&A market will continue to evolve"“We have a market that is much less volatile than it was in 2011 and we’re seeing an upward bias in equity markets this year, which is positive for the M&A environment,” Andrew Bednar, partner at Perella Weinberg told CNBC. “We’re also seeing a wide open credit market and very low historic rates.” While big merger deals signal confidence to investors, companies have been hesitant to pull the trigger on transactions due to ongoing fiscal woes in the U.S., debt worries in the euro zone and uncertainties over growth in Asia. “People don’t quite trust this economy because it has too many externalities feeding up to it,” explained Bednar. “That is giving some people some pause about the foundation of the economy.” Still, M&A volume has started to see a modest pickup in the first two months of 2012 after tapering off in the second half of last year. In particular, biotechnology firms have been
among the most active M&A participants. Most notably,
Amgen [AMGN Loading... () 
] announced in January it will acquire
Micromet [MITI Loading... () ] for $1.16 billion in an effort for the biotech giant to boost its oncology pipeline. Meanwhile,
Celgene [CELG Loading... () ] said it plans to purchase privately-held
Avila Therapeutics for $925 million. “I think the M&A market will continue to evolve,” said Bednar. “It is still going to include large-scale stock for stock mergers and cash acquisitions, but more and more, we’re seeing split-ups, split-offs, spin-offs and more complicated transactions.” Earlier this week,
Sears [SHLD Loading... () ] announced several moves to
increase liquidity, including the sale of 11 stores to
General Growth Properties [GGP Loading... ()
] for $270 million, and the spinoff of 1,250 Hometown and Outlet stores to shareholders. “[The M&A market] will be a less plain vanilla and more complex.” Follow JeeYeon Park on Twitter: document.write("");
document.write(""+"@"+"JeeYeonParkCNBC");document.write('');Questions? Comments? Email us atdocument.write("");
document.write("marketinsider"+"@"+"cnbc.com");document.write('');
![]()
View the original article here
The PMI, the earliest indicator of China's industrial activity, rose to a four-month-high at 49.7 in February from 48.8 in January. The PMI has been below 50, which demarcates expansion from contraction, for most of the last eight months.The survey shows the sector remained sluggish in February with overall orders falling, underlining Beijing's decision on Saturday to cut the amount of cash banks must hold as reserves — the required reserve ratio (RRR) — for the second time in three months.HSBC said its flash PMI data, based on 85-90 percent of responses to a monthly survey, suggested further policy easing was needed. The final PMI will be released on March 1."Growth remains on track for a slowdown, despite the marginal improvement in the headline flash PMI led by quickened production after the Chinese New Year," said Hongbin Qu, HSBC's chief economist for China."With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth. The PBoC, after delivering this year's first RRR cut, should step up policy easing as inflation pressures continue to ease."The new export orders sub-index dropped to 47.4 in February from 50.4 in January as the European debt crisis cast a shadow over Chinese exports.An output sub-index rose to 50.1 in February from 47.6 in January. New orders were flat at 49.1.China cut its reserve requirement ratio by 50 basis points to 20.5 percent on Saturday, releasing about 400 billion yuan ($63 billion) that could be used for bank lending. It marked the second 50-bp cut in the RRR in three months.China's economic growth is widely seen slowing down in January to March for its fifth consecutive quarter. Economists expect full-year growth to slip below 9 percent for the first time in a decade.Trade data for January showed imports and exports falling at their fastest rate since 2009, which analysts said at the time showed an economy weaker than previously thought even accounting for distortions caused by the Lunar New Year holidays, which fell in January.After the data, Premier Wen Jiabao had flagged fresh measures to support the economy, saying Beijing should "pay attention to the economic situation" and "act quickly".Economists Reuters spoke to since the latest cut in bank reserves said they were sticking with their forecasts for further easing this year. A Reuters poll conducted last month showed economists expect a total of 200 basis points of RRR cuts throughout 2012 to 19 percent.The central bank may also use open market operations to ease liquidity strains and authorities may relax curbs on the loan-to-deposit ratio requirement so banks can step up lending, analysts say.China's trade ministry is working on detailed policies, including more tax rebates to try to boost the country's exporters.Few expect the central bank to cut interest rates though while inflation remains stubbornly above the one-year deposit rate of 3.5 percent for fear it could spark a rush of cash out of deposits and into more speculative investments.Copyright 2012 Thomson Reuters. Click for restrictions.