Concerns over regulatory and tax risks pushed companies to abandon merger and acquisition deals. Fred Katayama reports.
Pfizer's $160 billion marriage proposal for Botox maker Allergan fell apart in April, but such broken deals dissuaded others from following suit. The value of announced merger and acquisition deals worldwide fell by a third in the second quarter according to Thomson Reuters data. Among the factors driving them lower: - the U.S.' crackdown on deals that help avoid taxes as in the case of Pfizer - tougher antitrust action by regulators which derailed the $38 billion merger deal between oilfield service companies Halliburton and Baker Hughes - and scrutiny over national security. That's what led Philips of the Netherlands to scrap the sale of a stake in its lighting parts business to a group led by China's GO Scale Capital. Barclays global head of M&A Gary Posternack thinks the failure of these deals has convinced others not to attempt a merger, saying, "This year, companies have been reluctant to take on meaningful regulatory or tax risk or to pursue unsolicited transactions to the same extent that many companies did last year." And now, Britian's vote to quit the European Union adds another layer of uncertainty that some M&A experts fear could make some companies cautious about pursuing deals.