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By Karen Schwartz
NEW YORK (Reuters) - Two huge new US acquisition bridge loans have pushed global M&A lending to a post-crisis high of $665 billion (424 billion pounds) in the year to date, according to Thomson Reuters LPC data, as takeovers continue to flourish despite recent volatility.
Renewed M&A dealmaking before the end of the year bodes well for next year, bankers say and is helping to allay concerns that the long-awaited resurgence of M&A in 2014 had stalled after October's volatility.
New jumbo bridge loans for specialty pharmaceutical company Actavis Plc (N:ACT) and oilfield services company Halliburton Co. (N:HAL) have helped to push global M&A lending to its highest point in six years, since $600 billion in 2008.
Global M&A lending of $665 billion for the year to date is already 26 percent higher than $529 billion in full-year 2013. A healthy deal pipeline is expected to push volume higher in 2014 and fuel continued activity in 2015.
"The pipeline is very, very healthy and as good as its been in a long while. It's looking positive into early 2015," a senior M&A banker said.
Actavis is backing its $66 billion acquisition of Botox-maker Allergan Inc. (N:AGN) with $41 billion of committed bridge loans from JP Morgan Chase Bank, Mizuho Bank and Wells Fargo as well as $5 billion of term loans.
Actavis topped a hostile bid from Canada's Valeant Pharmaceuticals International Inc. (TO:VRX) and William Ackman's hedge fund, Pershing Square Capital Management. A $20 billion loan, which was provided by Barclays and RBC Capital Markets, fell away with the unsuccessful bid.
Halliburton has lined up a fully committed $8.6 billion senior unsecured bridge financing to cover some of the cash element of its $34.6 billion acquisition of rival Baker Hughes Inc. (N:BHI), which is being provided by Bank of America Merrill Lynch as lead arranger and Credit Suisse.
The acquisition, which will create an oil services giant that will take on market leader Schlumberger
STRONG PROSPECTS
The two new jumbo bridge loans have boosted already robust M&A volume in 2014 so far and bankers expect a healthy M&A pipeline to keep restocking in 2015 as cash-rich companies facing low growth rates seek growth by acquisition.
US M&A lending of $409.25 billion is 14.6 percent higher in the year to date than 2013, which saw $382 billion of acquisition loans.
Event-driven financing in Europe, the Middle East and Africa (EMEA) is showing a far bigger 78.5 percent increase, after coming from a low base in 2013, to $153 billion in the year to date compared with $100 billion last year.
Asia Pacific is seeing lower levels of M&A activity, with a three percent increase in 2014 so far to $48 billion, from $46 billion in 2013.
M&A activity has peaked in the second half of 2014, despite a clamp down on US tax inversion deals, due to higher levels of activity in EMEA - and Germany in particular - and cross-border M&A, which has been one of the key themes of the year.
"I think the fact that you have an uptick in volume, and particularly the cross border nature of opportunities, is becoming more obvious," a second banker said.
Changes in US tax rules in September, which were designed to curb companies moving headquarters overseas to cut tax bills and boost profits, put pay to a merger between U.S. drugmaker AbbVie (N:ABBV) and Dublin-basedShiree (L:SHP) and a 13.5 billion pounds bridge loan backing the 32 billion pounds acquisition.
"The U.S. government moves to limit tax inversion related financings are offsetting the uptick in volume but I think the dealflow should continue," the second banker said.
(Additional reporting and editing by Tessa Walsh)