Mergers and acquisitions have overtaken last year’s record as companies have picked up the slack from private-equity firms hobbled by rising borrowing costs.
The value of transactions inched ahead of last year’s $3.55 trillion total this week, according to data compiled by Bloomberg. October was the busiest month in the past three, with $262 billion in deals, after a U.S. housing- market slump caused credit- market rates to rise in August and September, shutting down buyouts.
Xstrata Plc’s $2.9 billion purchase of Perth, Australia-based Jubilee Mines NL tipped the balance. Sovereign investment funds from the Gulf states and China also snapped up targets, making up for the decline in private- equity deals, which fell by a third in the past three months compared with a year earlier.
“There is a big turn back to corporates, and they are clearly looking to make acquisitions,” said Henrik Aslaksen, co-head of mergers in Europe at Deutsche Bank AG in London. “Private equity isn’t going away but is less competitive because of the increased cost of capital.”
Bank takeovers led the resurgence this month as Resolution PLC became the $10 billion target for Standard Life PLC and Pearl Group Ltd. in the biggest acquisition battle for a U.K. insurer.
Banco BPI SA bid $16.4 billion for Banco Comercial Portugues SA in the second attempt to create Portugal’s biggest bank. Toronto-Dominion Bank agreed to pay $8.5 billion for Cherry Hill, N.J.- based Commerce Bancorp Inc. in the largest foreign takeover by a Canadian bank.
