The value of announced mergers and acquisitions in Europe for 2006 last week overtook the combined value for the whole of last year, after a surge of deals.
European deals across all sectors have reached $1.25 trillion (€993m) this year, exceeding the $1.23 trillion last year, according to data provider Thomson Financial. The level is yet to reach the M&A peak of $1.57 trillion in 1999, which was driven by the technology, media and telecoms bubble. However, bankers are concerned regulatory problems and political interference could threaten some of the biggest cross-border deals in Europe this year, which could hit the value of announced M&A by more than €100bn ($126bn). The largest recent deal was private equity consortium Osprey's agreed takeover of UK water group AWG, with a value of $10.3bn. Thomson included the net debt of the target in its deal value. Osprey, whose backers include 3i, Colonial First State, Industry Funds Management and the Canada Pension Plan Investment Board, agreed the deal last Monday. AWG said in a separate statement it had received approaches from "certain third parties" which may or may not lead to another offer being made. Last Friday, Bahrain-based investment group Arcapita confirmed it had agreed a $3.6bn deal for Northern Ireland's biggest electricity supplier, Viridian Group. Bankers said the deal pipeline was strong for the rest of the year. Potential takeovers include Tata Steel mulling a $10.5bn deal for Anglo-Dutch rival Corus, as well as three private equity firms considering teaming up to launch a €30bn bid for Telecom Italia's mobile phone business in Italy. Investment banks are to reap record fees from advisory and underwriting, driven by the M&A boom. The increased activity has resulted in JP Morgan toppling Citigroup as highest earner this year. Fees for all investment banking activities in Europe are on course for a record year, with banks announcing income after nine months has beaten the full-year total for last year. Deutsche Bank topped the table for investment banking fees in Europe for the first nine months, totalling $1.3bn, followed by JP Morgan with $1.2bn.
