European mergers and acquisitions tipped to top £530bn

The value of mergers and acquisitions across Europe is forecast to hit $930 billion (£530bn) by the end of the year. Research by United States investment bank JP Morgan had previously estimated deals worth some $883bn (£505bn).

However, there has been a flurry of cross-border activity in the market, with many acquisitions involving British companies. These include Telefonica's £17.7bn bid for mobile phone operator O2 and Nippon Sheet Glass' £1.96bn approach to Pilkington, the glass-maker.

Several other large companies are in takeover talks that could lead to deals being announced before the end of the year, ScottishPower, the energy group, is in discussions with E.ON of Germany, while potential bidders are circling P&O, the British ports and ferries group that was recently approached by DP World, Dubai's state-owned ports operator.

However, the figure is unlikely to top the $1200bn (£686bn) seen in 1999, at the height of the stock market boom.

One feature of the recent deals has been the decision of companies to use their balance sheets to make acquisitions rather than return cash to shareholders.

"Today, most shareholders have stopped asking for cash back and prefer M&A," said Paul Gibbs, head of M&A research at JP Morgan. The end of restructuring and huge cash generation is a major driver of executive confidence."

Between 2001 and 2004, many companies cut back on M&A, partly because of high-profile mistakes made in the late 1990s.

600450 European mergers and acquisitions tipped to top £530bn
Date: 8 November 2005

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