KEY POINTS:
NEW YORK - The boom in global merger and acquisition activity reached new proportions as Blackstone Group, the private equity house, launched the biggest-yet public-to-private deal, worth US$36 billion ($54 billion).
Its acquisition of Equity Office Properties Trust (EOPT), America's largest owner of office space, is just the largest of a slew of deals being digested by Wall St. Companies with a market value totalling more than US$50 billion were the subject of agreed takeovers within the space of a few hours.
EOPT, founded and chaired by the real-estate billionaire Samuel Zell, owns 590 buildings comprising more than 9.8 million sq m of office space across the country. Blackstone is paying US$20 billion for the company and taking on its US$16 billion of debt.
It is the most potent example yet of the muscle of the biggest private equity firms, in a year that has already seen the toppling of a 17-year-old record for the biggest take-private deal. That was Kohlberg Kravis Roberts' 1989 acquisition of RJR Nabisco, which spawned the book and film Barbarians at the Gate.
Other deals this week included two in the mining sector, the US$26 billion acquisition of Phelps Dodge by Rowan McMoRan to create North America's largest copper company, and the US$2.5 billion takeover of Oregan Steel Mills by Russian steel maker Evraz.
Mike Lenhoff, strategist at Brewin Dolphin, said: "Intense global competition is encouraging companies to try and get together to reap economies of scale, reduce their cost output and, as in the case of the miners, to secure resources they may not have access to."
In London, takeover speculation continued to swirl around stocks such as Home Retail, the owner of Argos. Across Europe, M&A volumes are set to hit US$1.2 trillion this year, according to figures from Morgan Stanley.
- INDEPENDENT
