International BusinessInternational M&A deals to fall 56% in '09: OECD
Global mergers and acquisitions (M&A) are projected to fall 56 per cent in 2009 compared to last year, mainly on account of sharp declines in such activities in rich and emerging markets including India.
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The Organisation for Economic Cooperation and Development (OECD) today said the expected decline in M&A activities this year would be the "largest year-on-year decline since 1995".
In its latest report, the grouping of 30 developed and developing nations, noted that international M&As are forecast to plunge 56 per cent this year in comparison with 2008.
The estimate is based on an OECD analysis of data for international M&A activities up to November 26, 2009.
According to the report, the projected decline is primarily due to a 60 per cent fall in value of cross-border M&A by firms based in the OECD area, to just $454 billion in 2009 from over $1 trillion last year.
Moreover, there has been a steep drop in M&A activities into and from major emerging economies.
"International M&A activity by firms based in Brazil, China, India, Indonesia, Russia, and South Africa fell by 62 per cent to $46 billion in 2009 from $121 billion in 2008," the OECD said.
It added that such activities into these countries is anticipated to slide by almost 40 per cent to little over $80 billion in 2009 from just under $140 billion last year.
M&A investments have been severely hit by the financial turmoil, which has resulted in tight credit flow.
"Against the backdrop of a fragile global economy and sharp declines in international investment activity that have now spread to the emerging economies, the international investment policy community cannot afford to relax," OECD Secretary-General Angel Gurria said in a statement.
Speaking at the OECD Global Forum on Investment in Paris, he noted that investment protectionism poses a grave risk to recovery by further reducing international investment flows.
"...Latest international investment estimates suggest that total foreign direct investment into the 30 OECD countries will fall to $600 billion in 2009 from a 2008 total of $1.02 trillion," the statement added.