<p>This week’s move by Exxon Mobil Corp to buy XTO Energy Inc for US$30 billion in stock may be a harbinger of activity to come in 2010 as companies flex their stronger share prices and release pent-up deal demand.<br /><br />The XTO takeover followed other corporate mega-deals, such as the US$26 billion cash-and-stock deal for Burlington Northern Santa Fe by Warren Buffett’s Berkshire Hathaway, and Comcast Corp’s US$30 billion planned purchase of NBC Universal.<br /> <br />Deal value<br />M&A totals US$1.968 trillion so far in 2009, down 32 per cent from full-year 2008 and down 53 per cent from the record high in 2007, according to data from Thomson Reuters. <br /><br />The US, which suffered a six-year low in mergers and acquisitions, still squeaked ahead of Europe for the first time in three years. Bankers expect flat-to-modest growth for 2010.<br /><br />Financial sponsor<br />Further, global buyside financial sponsor activity dropped 45 per cent in 2009, hitting a seven-year low of $130 billion. There were only two financial sponsor deal over US$5 billion this year —— the takeover of Delphi Corp by creditors, and the acquisition of IMS Health Inc by TPG Capital and the Canada Pension Plan.<br /><br />Private equity is sitting on US$400 billion in dry powder, or cash, while Fortune 1000 companies have more than US$1.8 trillion of cash on hand, an increase of $271 billion over last year, according to Ernst & Young’s Transaction Advisory Services. <br />As debt markets become more open, with banks willing to lend money for deals with higher leverage, private equity firms and corporations will begin to compete again on deals.</p>
<p>This week’s move by Exxon Mobil Corp to buy XTO Energy Inc for US$30 billion in stock may be a harbinger of activity to come in 2010 as companies flex their stronger share prices and release pent-up deal demand.<br /><br />The XTO takeover followed other corporate mega-deals, such as the US$26 billion cash-and-stock deal for Burlington Northern Santa Fe by Warren Buffett’s Berkshire Hathaway, and Comcast Corp’s US$30 billion planned purchase of NBC Universal.<br /> <br />Deal value<br />M&A totals US$1.968 trillion so far in 2009, down 32 per cent from full-year 2008 and down 53 per cent from the record high in 2007, according to data from Thomson Reuters. <br /><br />The US, which suffered a six-year low in mergers and acquisitions, still squeaked ahead of Europe for the first time in three years. Bankers expect flat-to-modest growth for 2010.<br /><br />Financial sponsor<br />Further, global buyside financial sponsor activity dropped 45 per cent in 2009, hitting a seven-year low of $130 billion. There were only two financial sponsor deal over US$5 billion this year —— the takeover of Delphi Corp by creditors, and the acquisition of IMS Health Inc by TPG Capital and the Canada Pension Plan.<br /><br />Private equity is sitting on US$400 billion in dry powder, or cash, while Fortune 1000 companies have more than US$1.8 trillion of cash on hand, an increase of $271 billion over last year, according to Ernst & Young’s Transaction Advisory Services. <br />As debt markets become more open, with banks willing to lend money for deals with higher leverage, private equity firms and corporations will begin to compete again on deals.</p>