Alternative Market Briefing

Hedge funds see rebirth in M&A activity in 2012

Wednesday, March 28, 2012

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David Lenfant By Benedicte Gravrand, Opalesque Geneva:

The merger and acquisition (M&A) arena is in full rebirth, says a French asset manager who specialises in merger arbitrage.

As the M&A market goes through cycles, in recent years, 2002 and 2003 were weak years due difficult corporate financing conditions, and so was 2008, which saw a slump in the number of deals. But it has been picking up since the end of 2009, first in Asia, then in North America and now in Europe.

David Lenfant is a partner and in charge of business development at Laffitte Capital, a Paris-based asset management company that manages $350m in two merger arbitrage funds. He was recently interviewed by Matthias Knab for Opalesque TV.

Lenfant thinks that all the ingredients are gathered for a new cycle in the M&A arena. The fist ingredient is cash, as the "balance sheets are full of cash." The second ingredient is valuation.

"The US market is pretty well valuated at the present time, and it is good news because it tends to bring people around the table in order to find a good price and to accept an offer," he explains. "The European stock valuation is lower at the same time, so we could imagine that with a stronger dollar and low valuation in Europe, we may see many of deals from US companies on European targets."

The third ingredient is the arrival of new buyers on the ......................

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