Companies across the globe are putting deals on ice as they struggle to value acquisitions amid the worst financial crisis seen on Wall Street and the City of London in decades.
The collapse of Lehman Brothers and wider financial turmoil has dealt a heavy blow to the confidence of strategic and financial buyers. The US bank had been advising on and providing financing for many deals, including Teva Pharmaceutical's $8.8bn merger with rival Barr Pharmaceuticals and Finmeccanica's $5.2bn acquisition of DRS Technologies, which are now in limbo.
Henrik Aslaksen, co-head of global M&A at Deutsche Bank, said the pipeline of deals has not shrunk but the current market volatility made it harder to execute deals. “Financing is also more challenging. However, this is not stopping some companies from approaching target boards with lower offers when the deal's logic is still sound,” he said.