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Global takeovers hit £1 trillion

Richard Wachman

Reuters and Microsoft deals lead merger mania.

A GLOBAL mergers and acquisitions boom is under way that is expected to smash previous records, with deals so far this year valued at nearly £1 trillion, almost double the figure recorded during the same period last year. The data come from Thomson Financial, itself involved in the corporate feeding frenzy via a putative bid for news and financial information group Reuters worth £8 billion.

Elsewhere, Microsoft is plotting an audacious $50 billion takeover of Yahoo as a way of competing with Google and has hired investment bank Goldman Sachs to advise on a transaction that would see its share of the U.S. global search market jump to 35 per cent against Google's 53 per cent.

Speculation that a deal could be close was fuelled by the revelation Yahoo's chief executive Terry Semel is attending an advertising summit organised by Microsoft in Seattle this week, where he is expected to meet founder Bill Gates.

In London investment bankers said that their deal pipelines were about 50 per cent ahead of this time last year. This means that 2007 will be a record year for mergers and acquisitions, with the estimated value of transactions as high as £2 trillion, far more than during the dotcom boom.

Media companies are at the centre of bid fever following a bid from Rupert Murdoch's News Corporation's for Dow Jones, owner of The Wall Street Journal, and confirmation from EMI that it has received several preliminary offers, believed to be from private equity groups. Mr. Murdoch must first win over the Dow's controlling shareholder, the Bancroft family.

There is action in other sectors too: Franco-Spanish tobacco company Altardis is expecting an offer from private equity groups PAI and CVC.

Rival suitor Imperial Tobacco must decide whether to sweeten its terms. —

© Guardian Newspapers Limited 2006

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