Although the year ahead is likely to see a slight uptick in strategic mergers and acquisitions (M&A), opportunistic activity will remain rare, driving lacklustre overall M&A activity for Europe, the Middle East and Africa (EMEA) corporates in the near term, says Fitch Ratings.
The credit ratings agency (CRA) believes that a fragile economic recovery in the eurozone and early tapering of the US Federal Reserve’s quantitative easing (QE) programme will likely offset slowly rising enthusiasm stemming from a gradual market improvement, as well as rising stock markets.
However, sector disparities will persist, with rising structural M&A in the telecoms sector compared with limited activity across pharmaceuticals and natural resources. The telecoms industry is undergoing high levels of strategic and structural M&A, primarily due to increasing competitive challenges and high investment requirements, which drive the need for further industry consolidation.
In western Europe, a successful merger between E-Plus and O2 Germany could strengthen M&A activity in serving as a reference for authorities in other markets.
Activity in the pharmaceutical sector will be affected by what Fitch dubs ‘the patent cliff’, notably for the UK’s AstraZeneca, which could embark on mid-large scale acquisitions for drugs in late-stage development or for established brands.
In natural resources, Fitch anticipates muted M&A in the mining sectors as cash generation will remain constrained by range-bound commodity prices and lingering demand pressure. However, the focus of oil and gas majors on boosting reserves and production capacity provides a springboard for future deal flow.
GTNews asks Pugsley about what advice she would give to treasurers dealing with mergers and acquisitions, what the key challenges for her year ahead will be and how she is selecting a treasury management system (TMS).
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
Tim de Knegt, strategic finance and treasury manager for the Port of Rotterdam, discusses how he is using blockchain, the challenges he will face in his role of treasury over the next 12 months and the advice he would give to someone starting out their career in treasury.
Due to the low interest rate environment and Basel III regulation many corporate treasurers, who may have in the past been very reliant on the banking sector to provide them with cash management solutions, have been forced to explore alternative options as banks have been refusing short dated cash deposits.