Four of the 10 biggest deals were struck in part to fend off competition from the largest tech companies as the value of acquisitions announced during the first six months of the year increased 61 percent from the same period in 2017.
More than $2.5 trillion in mergers were announced during the first half of the year, as fears of tech companies’ growing ambitions helped drive a record run of deal-making.
Four of the 10 biggest deals were struck in part to fend off competition from the largest tech companies as the value of acquisitions announced during the first six months of the year increased 61 percent from the same period in 2017, according to data compiled by Thomson Reuters. That has put mergers in 2018 on pace to surpass $5 trillion, which would top 2015 as the largest yearly total on record.
Even rising global trade tensions did not manage to stifle acquisitions: Deals involving companies based in different countries nearly doubled compared with the first half of last year and accounted for more than 40 percent of all announced transactions.
The increase in deal-making has played out against the backdrop of a healthier economic outlook in many parts of the world nearly a decade after the recession. In the United States, interest rates remain low, corporate earnings are ballooning, thanks in part to tax cuts, and stock prices remain near historic highs. In this environment, companies have turned to mergers and acquisitions for growth, trying to grab market share and reinvent their business models, especially as Amazon, Netflix and other tech companies increasingly push into new industries.
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Big deals, a number of them in media and health care, have driven much of the activity. So far this year, companies have announced 36 transactions valued at $10 billion or more, according to Thomson Reuters. They combined for $950 billion in deals, or nearly 38 percent of all activity.
Stephen F. Arcano, a partner specializing in mergers at the law firm Skadden, Arps, Slate, Meagher & Flom, said that while the market for mergers is strong now, there could be reasons to be concerned about a slowdown.
“The fundamentals for a strong M&A market are still in place, but there are risks that could become headwinds, such as the concerns regarding potential trade wars, regulatory uncertainty and, in the longer term, rising interest rates,” he said.