Unfriendly deals are up this year

May 5, 2009

Broadcom’s tender offer for Emulex shares may be techland’s first hostile deal this year, but unwanted moves seem to be fairly popular across the rest of the M&A landscape. At any rate, more popular than last year.

This year, 30 percent of all deals involving U.S. public companies have been “unfriendly,” compared with 21 percent in the same period last year, according to FactSet MergerMetrics data. In absolute numbers, there were more such deals last year (23) than this year (18).

In its definition of “unfriendly” deals, FactSet includes both unsolicited offers, in which “the acquirer has publicly disclosed its offer to acquire the target,” and hostile deals, in which “the target’s board has formally rejected the unsolicited offer and the acquirer has continued to try and get control of the target.”

The New York Times Dealbook blog, meanwhile, cites data from Dealogic saying the volume of hostile deals so far this year is just 4 percent of total announced deals worldwide, compared with 12 percent announced in all of 2008. Not sure if Dealogic distinguishes between “hostile” and “unsolicited” the way FactSet does.

Factset’s Jim Mallea explained that Dealogic’s numbers may also include all announced deals, including public and private targets, which would account for the discrepancy with FactSet’s numbers.

The number of companies that have announced their intention to wage a proxy war where they’ve also announced an unsolicited or hostile bid is also higher this year, FactSet data show — 10 situations this year compared to six last year in comparable periods.

Some of the unsolicited takeover bids this year include PepsiCo’s $6 billion offer for The Pepsi Bottling Group and Pepsi Americas, and Enterprise Procuts Partners’ $2.75 billion takeover offer for oil pipeline company Teppco Partners. Both targets have rejected the offers.

On the hostile side, the year started with CF Industries’ $2.8 billion bid for Terra Industries. A month later, CF Industries itself became the target of a hostile takeover from Agrium Inc.

Of course, none of these deals have the sexiness of Microsoft’s failed takeover bid for Yahoo, which dominated headlines from February to June last year, and continues to evoke interest and share spikes even now.

Here’s the list of from FactSet:


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