Oil Shakeout, Corporate Breakups Could Drive Merger And Acquisition Activity In 2015
Dec 23, 2014
By Antoine Gara, Forbes Staff writer: The drilling industry’s woes as the price of oil sits below $60 a barrel are expected to become a new driver of merger and acquisition activity in 2015, after a banner year for deal-making as steadily rising U.S. economic data and an easing of political battles in Washington pushed stock markets to new records, outweighing tremendous geopolitical turmoil. Corporate spinoff activity, urged on by increasingly powerful activist hedge fund investors and CEO’s looking to simplify their businesses, will also likely drive deal activity. Overall, global M&A activity eclipsed $3 trillion in 2014, rising 22% year-over-year to $3.58 trillion in deals, the third highest M&A figure on record and the highest reading since the global financial crisis.
Corporate spinoffs, an area of rising activity, aren’t expected to cool in 2015 according to a study done by The Edge Consulting Group and Deloitte. The market capitalization of companies engaging in spinoff transactions reached $664 billion in 2014 and that figure is expected to rise to $775 billion next year. By 2016, The Edge and Deloitte expect that figure to top $3 trillion in aggregate.