Global companies reproduce the tide of mergers and acquisitions

In the past year, global mergers and acquisitions have taken place one after another. A new wave of corporate mergers and acquisitions has formed. Climaxed corporate mergers and acquisitions reflect the trend of internationalization and the global economic recovery. Judging from the actual effect, benign mergers and acquisitions among large multinational companies not only benefit the industry's integration and development, but also contribute to the sustainable growth of the world economy.

Obvious mergers and acquisitions trend

The statistical graph of an authoritative organization shows that this wave of mergers and acquisitions started in 2013. The statistics of the merger market and other institutions show that after the outbreak of the international financial crisis in 2008, global companies generally tightened their expenditures and reduced their liabilities, leading to a downturn in international M&A activity for five or six years. In 2013, as the world economic outlook continued to grow, the amount of global corporate M&A transaction increased steadily. In 2013, the total amount of international M&A transactions increased nearly double-digit.

From the perspective of merger transactions, more and more corporate mergers and acquisitions are dazzling. As of September 2, 2013, Verizon Communications of the United States decided to pay Vodafone’s $130 billion in cash and stocks to acquire a 45% stake in the joint venture between the two companies, Verizon Wireless, the largest mobile operator in the United States. This transaction is the third largest transaction in the world's corporate history. The benefits of this deal to Verizon are clear. It not only obtains 100% ownership of its main business, but also strengthens its position as the leading US mobile operator.

In 2014, the tide of mergers and acquisitions accelerated significantly. In the first four months, the pace of mergers and acquisitions of global companies calculated by the amount of mergers and acquisitions accelerated at a rate of around 30%, the fastest increase in nearly seven years, and the scale of cumulative mergers and acquisitions easily reached the level of trillions of dollars. By June, the year 2007, when the year of mergers and acquisitions exceeds the historical peak, has already been felt at hand. Among them, U.S. corporate mergers and acquisitions are the most active and the amount of mergers and acquisitions has reached 800 billion U.S. dollars.

It is also worth noting that the trend of mergers and acquisitions in Asia is also very rapid. In order to obtain leading technologies and well-known brands, Asian companies rely on strong financial strength and new international perspectives to conduct international mergers and acquisitions in 2014 with a year-on-year growth rate of 80%. Although the effect of M&A in Asian countries is still far behind the M&A of developed countries, its influence on the rising tide of international mergers and acquisitions cannot be ignored.

According to estimates by Marketfield Asset Management, the total amount of global mergers and acquisitions in 2014 will exceed 4 trillion US dollars. The company stated: "At present, we have stepped into a wave of mergers and acquisitions. The management team of the company is already mentally prepared to either buy others or be bought by others."

Economic recovery fuels

This year's corporate mergers and acquisitions can climax, first benefit from the trend of economic globalization. Almost all the elements of funds, production, sales, and customers in economic activities continue to develop in depth toward internationalization, prompting large enterprises not only to think in the international atmosphere, but also to extend their reach to companies in other countries, and even to different industries. Within the company. From the perspective of the development of economic globalization, the intensification of the trend of international corporate mergers will no longer be just an option for the continued development of more and more companies, but the best, or even the only way out. It is expected that the trend of mergers and acquisitions among international companies will advance along with the development of economic globalization, and the two will complement each other and be mutually causal.

Second, the recovery of the world economy, especially the economic recovery of developed countries such as the United States, has become the second largest driver of international corporate mergers and acquisitions. In general, the ultimate goal of M&A is development. Only when the overall economic outlook is favourable will the potential of the company continue to increase. The improvement of the global economic situation can provide broad prospects for mergers and acquisitions.

Third, multinational corporations have a disposable cash amount of up to 4 trillion US dollars, providing cash protection for mergers and acquisitions. Having sufficient cash on hand can not only reduce the capital cost of mergers and acquisitions, but also spur policy makers' ambitions to allow them to attempt large-scale mergers and acquisitions that their predecessors could not even think about.

Taken together, the current wave of mergers and acquisitions not only has the international environment and economic prospects based on a good foundation, but also has sufficient technical support in terms of cash, etc., can be described as Shuntian, Yingdi, and people. If there is no accident, the tide of international corporate mergers and acquisitions in 2014 will leave a deep impression in the course of world economic development.

Convergence of goals varies

In this wave of mergers and acquisitions, the most striking feature is the industry differences. Although this round of mergers and acquisitions, like the last round of mergers and acquisitions, began around high-tech and spread across major industries, the most active among them was the pharmaceutical industry and high-end technology industries for agricultural products. Due to the large scale of the industries such as science and technology, telecommunications and media, and leading economic development, heavyweight M&As still occur in such industries. However, the sudden rise of the industry is also worthy of worldwide attention. For example, Activas spent USD 25 billion in the acquisition of the Forest Laboratory earlier this year, not only integrating the two fastest growing pharmaceutical companies, but also creating a leading research and development in advanced fields such as biopharmaceuticals. , manufacturing, marketing new model.

In fact, benign mergers and acquisitions have sprung up after the rain due to the broad prospects for development in the pharmaceutical R&D and manufacturing fields and huge market potential. In the field of oncology treatment, in the field of responding to diabetes, and in the field of new antibiotic research and development, the integration of corporate integration with international corporate mergers and acquisitions has formed a vibrant picture of industrial change, which has inspired the industry and beyond. Statistics show that so far, the world's medical industry's mergers and acquisitions transactions have reached as much as $354.7 billion, a record high, an increase of more than five times year-on-year. Similarly, in the cutting-edge agro-industry industry, a keen-sense giant company closely follows the pulse of the industry and aims at biotechnology and seed companies for acquisition integration with a view to bringing world agriculture to a new era.

Although the development of mergers and acquisitions can be roughly divided into three types: horizontal mergers and acquisitions, vertical mergers and acquisitions, and diversified mergers and acquisitions, the goal of mergers and acquisitions has been revamped. Strengthening competitive business is one of the main goals of mergers and acquisitions. For example, Medtronic, the world’s second largest medical device company, announced the acquisition of Kehui Medical for US$42.9 billion, becoming a record acquisition in the history of medical device industry. Its core purpose is to gradually abandon slow-growing products and focus on its core competitive industries to consolidate. Its dominance in related products.

Expanding its own international production and marketing channels is the most common acquisition target. For example, Oracle Corporation of the United States acquired Micros Systems, a software provider of the hotel industry, for US$5.3 billion, which is an M&A with the main purpose of expanding sales channels at home and abroad.

Although the purpose of mergers and acquisitions is to strengthen monopoly, expand marketing channels, and consolidate the advantages of core products, and so on, but many American companies for tax evasion and tax avoidance mergers and acquisitions, can also be regarded as a wonderful flower in the merger and acquisition of Bai Garden. For example, in the early July of this year, mergers and acquisitions of American pharmaceutical companies Abbvie and Mylan, the real purpose behind the accusations was to avoid taxation on overseas mergers and acquisitions. According to statistics, in the past 10 years, there were more than 50 companies in the United States that had overseas acquisitions. The starting point was mainly tax avoidance. Such companies do not move their headquarters into low-tax countries through mergers and acquisitions, or set up treasuries abroad to circumvent the high taxation of the United States. The tax avoidance of American companies has been severe enough to force the U.S. government to formally request the U.S. to legislate as soon as possible in early July to prevent such mergers and acquisitions or the relocation of companies. It is no wonder that the United States, the United States’ Treasury secretary, has no choice but to promote "new-type economic patriotism" among entrepreneurs in the United States, where there are policies and strategies to counter the same.

The tide of corporate mergers and acquisitions that followed the climax is a product of economic acceleration and other factors, which in turn will also contribute to accelerating economic growth. However, one cannot ignore the negative effects of mergers and acquisitions. The acquisition of monopoly products, markets and other factors is still a whirlpool in this wave of mergers and acquisitions. Its side effects are self-evident. In addition, sufficient capital may stimulate the M&A bubble. With the spurt of the US stock market spurring the advancement, some companies will foam their acquisitions by holding large amounts of cash at hand, thus laying down hidden dangers.

All in all, the tide of mergers and acquisitions that is still developing is likely to create history in terms of capital size and industry coverage. However, judging from the past five wave of mergers and acquisitions, each bubble of mergers and acquisitions has finally formed a bubble, and bubble mergers and acquisitions have invariably shattered with the collapse of the stock market. As the tide of mergers and acquisitions continues to advance, wise entrepreneurs should remain clear-headed and prevent and circumvent the shocks that may be created when the merger bubble bursts.