Mergers and acquisitions activity drops after frenzy

By Nick Stride

Friday 3rd May 2002

The first quarter of this year was not a vintage period for financiers but most say they are happy with their deal-flow.

Figures compiled by Thomson Financial showed mergers and acquisitions activity from January to March this year was worth just $220 million, compared with $3.54 billion in the first three months of 2001.

That was the lowest figure since the second quarter of 1990, in the depths of a recession.

But much of the earlier period's total was accounted for by the dismantlement of the Fletcher Challenge group and by a frenzy of activity sparked by the impending enactment of the Takeovers Code and the Commerce Amendment Act.

In volume terms the decline was less marked, with 43 transactions announced in the first quarter of 2002 co mpared with 52 for the three months a year earlier.

Stock Exchange trading was also relatively quiet despite a lift in share prices. The Securities Commission's first quarter securities markets report showed the value of trading fell 13.8%, to $4.5 billion, from the December quarter, while the number of transactions fell 17.5% to 130,000.

The total capitalisation of all listed equities reached $43.8 billion, up 2.3%, following a 9.3% rise in the December quarter.

The commission said the rising trend of household deposits into bank and non-bank institutions continued. The value of deposits rose by 3.6%, to $46.6 billion.

The Reserve Bank's quarterly survey of the 18 largest fund managers, accounting for 95% of the market, showed the value of funds under management rose 2.7% to $47.3 billion.

Over the quarter managed funds had 9.8% more assets invested overseas ($18.7 billion) and 1.4% less invested in New Zealand.

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