Why Is Quantitative Easing Boosting Emerging Markets and Slowing Mergers?
Mergers and acquisitions are down since this time last year as corporate CEOs are trying to make sure they’re getting the best bang for their buck.
Inflated stock prices, due in large part to quantitative easing, have made it difficult to judge a company’s value, leading many to hesitate from pursuing larger acquisitions or mergers.
Notable exceptions so far this year include SoftBank Mobile Corp.’s takeover of Sprint Nextel Corp. (NYSE:S) and Vodafone’s (NASDAQ:VOD) purchase of German cable provider Kabel Deutschland. Both deals are representative of a trend of only the largest of corporations engaging in mergers and acquisitions.
Hernan Cristerna, co-head of global mergers and acquisitions at JPMorgan Chase & Co. in London, told Reuters this trend is “being supported by fewer, larger deals, rather than a steady flow of smaller transactions,” something she expects to continue.