M&A’s Gain Momentum, Optimizing Industry for Hedge Funds

February 23, 2012 Debbie Jacobs Economic Barometer

M&As in Europe are regaining momentum, setting the stage for the hedge fund industry’s new leaf.

Earlier this week, TNT Express shares rose 60% after rejecting UPS’s billion-euro takeover, leading investors to predict an even higher price in the future.  Also this week, stock in Misys PLC, the financial software, climbed 10%. Hedge funds have been actively involved in both scenarios.

“We are seeing more M&A deals in Europe, thus creating more investment opportunities,” explained Amit Shabi of Bernheim Dreyfus and Co. “Spreads remain at a very attractive level despite the bull market and the decrease of volatility observed since the beginning of the year. This means that most people consider that we could see a rise in volatility since key issues such as Greece, sluggish growth and deficits haven’t been fully addresses yet.”

In general, the boost in M&A levels implies that markets are riding an upward trend. Demand is increasing as well.

“Companies are generally trading on low valuations, and there are plenty of trade buyers with lots of cash looking to buy for growth,” explained Simon Davies of Cheyne Capital. “As these deals are often highly synergistic, target companies can justify higher valuations than the market expects.”

Cheyne Capital, Europe Economy, Hedge Fund Industry, Investment, M&As,

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