Jones Lang LaSalle


M&A lifts acquisition loan volume to $347B, up 91% on year
By Marietta Cauchi

Last Update: 12:06 PM ET Apr 25, 2006
NEW YORK (MarketWatch) --

Global merger and acquisition activity has boosted acquisition financing loan volume to $347 billion, up a massive 91% from $181.6 billion this time last year, according to data published Tuesday by Dealogic.

Meanwhile refinancing loan volume stands at $212.7 billion year to date, down 35% from $327 billion last year.

The figures aren't surprising because of the very favorable lending environment for acquisitions, say experts.

"Financial institutions from banks to hedge funds are all very willing to put money to work in good acquisitions and are willing to do it at very high cash multiples," says Bob Filek, partner in PricewaterhouseCoopers' Transaction Services group.

While lenders are offering up to six or seven times EBITDA for acquisitions, rising interest rates are reversing last year's refinancing trends, he adds. EBITDA is earnings before interest, taxes, depreciation and amortization.

Loans to finance acquisitions in Germany accounted for 27% of acquisition loan financing so far this year, including the top three loans - $38.2 billion to finance E.ON AG's (EON) purchase of Endesa SA (ELE), $19.2 billion for Merck KgaA's (MRK.XE) planned acquisition of Schering AG (SCH.XE) and $18 billion for Linde AG's (LIN.XE) purchase of BOC Group PLC (BOC.LN).
Only the U.S. topped Germany, with U.S. companies accounting for 43% of loan volume related to acquisitions, said Dealogic.

Deutsche Bank (DB) is the top bookrunner for global rankings for acquisition related loans, accounting for 30% of volume share, leading on 19 deals with an aggregate deal value of $104 billion.

JPMorgan Chase & Co. (JPM) leads the global rankings for refinancing loans, accounting for 19.9% of volume share.

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