What does the Comeback of M&A Mean for Investors?

Takeovers are typically good news for shareholders in the businesses that get acquired. But an this year acquirers are seeing their share prices jump too

Fidelity International 1 September, 2014 | 4:08PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here Tom Stevenson, Investment Director at Fidelity Personal Investing, comments on the comeback of M&A.

Takeovers are back, with deal volumes returning to levels last seen in 2007. The value of mergers is up 73% in the first half of 2014. That’s the strongest first-half gain since 1998, with the global total topping $1.8trn so far this year.

Takeovers are typically good news for shareholders in the businesses that get acquired. But an interesting development this year has been the way in which shareholders are smiling on acquirers too. That’s a reflection of the perceived value that deals can create for both buyers and sellers. Since 2010 more than half of all deals have created a new company worth more together than the value of the constituent parts. In part this is because companies have become more disciplined about not over-paying.

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Fidelity International

Fidelity International  

is a global leader in asset management, providing investment products and services to individuals and institutions in the UK, continental Europe, the Middle East and Asia Pacific.