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September 1, 2010 4:31 PM

Reuters Confirms: August Was Busy M&A Month

Posted by Zach Lowe

August is over, and we'll remember it mostly for our wonderful vacation. But a lot of deal lawyers won't have those sorts of memories, since many apparently cancelled their vacations--or at least their golf games--to deal with an unexpected wave of M&A action this summer. And today Thomson Reuters confirms: August 2010 had the most M&A activity of any August since 1999. 

Under the Thomson Reuters system--and every ranking system is different--announced deals in August totaled $262 billion, the highest amount since 1999. Experts gave the usual list of explanations for why deal volume increased even as the economy sputtered: Companies are flush with cash, and shareholders demand they spend it on deals or return it to shareholders via dividends or buybacks. Also, M&A gurus from the likes of Sullivan & Cromwell and Fried, Frank, Harris, Shriver & Jacobson told Thomson Reuters, interest rates remain low, and the public markets are probably undervaluing attractive companies, 

And so it's time to rejoice, right? Sure, right up until you read this sentence in the Reuters piece: "Still, by number of deals, [August 2010] ranks lower than last August." In other words: A bunch of huge deals account for a decent chunk of that $262 billion. Among the biggies: BHP Billiton's $39 billion move for Potash Corp. and Intel's $7.7 billion offer for McAfee. Overall, the number of deals remains underwhelming. Does that temper your optimism?

Still, the glass-half-full folks are anticipating that deal activity will remain strong once everyone gets back from their Labor Day weekend plans. If they're right, all you overworked M&A lawyers will be able to make up for this summer with even grander vacation plans for next year.

Unless you're stuck in the office once again.

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