Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Citi dealmaker says mergers and acquisitions to slow down

Published 14/03/2019, 16:01
© Reuters. The Citigroup Inc logo is seen at the SIBOS banking and financial conference in Toronto
C
-
CELG
-
BMY
-

By Liana B. Baker and Svea Herbst-Bayliss

NEW ORLEANS (Reuters) - Global economic uncertainty will lead to a slowdown in corporate mergers and acquisitions (M&A) in 2019, a top Citigroup Inc (NYSE:C) investment banker said on Thursday.

"We are heading into 2019 with substantially less momentum than in 2018," Mark Shafir, Citigroup's global co-head of mergers and acquisitions, told the Tulane Corporate Law Institute conference in New Orleans.

"The economic environment remains uncertain, trade and other tensions unnerve geopolitical relationships, and heightened volatility drives wild swings in the equity markets," he said.

Shafir said he expects M&A volumes to drop roughly 10 percent this year, and if certain risk factors worsen, they could drop as much as 20 percent. M&A volumes exceeded $4 trillion (3 trillion pounds) in 2018, up 20 percent year-over-year, making it the third best year for deals on record, Shafir added.

Some big deals announced this year, including drug maker Bristol-Myers Squibb (NYSE:BMY) Co's $74 billion acquisition of Celgene Corp (NASDAQ:CELG), have provided some encouragement that M&A volumes will be healthy even if they drop, Shafir said.

He added the current M&A environment rewards "CEOs and boardrooms who make strategically sound, proactive rather than defensive M&A decisions."

Shafir said he remains cautiously optimistic that pressure from activist hedge funds pushing for spin-offs, as well as private equity firms looking for places to park their capital in leverage buyouts, will help keep up the dealmaking pace.

Early signs of a potential recession in the bond market do not give Shafir much comfort, however. In December, the U.S. treasury yield curve showed evidence of inverting for the first time in more than a decade.

© Reuters. The Citigroup Inc logo is seen at the SIBOS banking and financial conference in Toronto

"History shows M&A activity meaningfully slows nine to 13 months following an inversion," Shafir said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.