Intl M&As' decline by 56% predicted

I / Jakarta December 11, 2009, 11:47 IST

International mergers and acquisitions are forecast to decline by 56 per cent this year compared with 2008, the largest year-on-year decline since 1995, the Organization for Economic Cooperation and Development (OECD) said in a report.

The estimate is based on OECD's analysis of data for international Mergers and Acquisitions (M&A) activity up to 26 November 2009, OECD reported yesterday.

The fall was largely due to the 60 per cent decline in value of cross-border M&A by firms based in the OECD area, from over $1 trillion in 2008 to $454 billion in 2009, it said.

However, it was also due to the first sharp declines in M&A activity into and from major emerging economies: international M&A activity by firms based in Brazil, China, India, Indonesia, Russia, and South Africa fell by 62 per cent to $46 billion in 2009 from $121 billion in 2008.

M&A activity into these countries is forecast to decline by almost 40 per cent this year to just over $80 billion from just under $140 billlion in 2008, the organisation said.

Speaking at the recent opening of the OECD Global Forum on Investment in Paris, OECD secretary general Angel Gurria said that governments needed to do more to promote business investment.

"Against the backdrop of a fragile global economy and sharp declines in international investment activity that have now spread to the emerging economies, the international investment policy community cannot afford to relax," Gurria said.