Get ready for bout of merger mania

MERGERS and acquisitions are back in a big way. It’s a veritable boom and the chances are there’s more to come. No wonder City dealmakers are rubbing their hands in glee.

Large companies and private equity houses are sitting on giant cash piles and are itching to spend after years of reducing debts and returning funds to appease frustrated shareholders.

Record low interest rates also mean debt financing is cheap, a factor GlaxoSmithKline boss Sir Andrew Witty has warned could prompt some firms to make rash decisions and fork out more than they should on ill-advised deals.

The pharmaceutical sector alone has seen its busiest period of M&A on record with, according to some estimates, more than £290bn of deals since the start of 2014 when deal volumes began to pick up alongside recovering global economic conditions.

Companies are now seeking to both take out their rivals – such as the case of Shell’s pursuit of BG Group or Heinz buying Kraft – while others are looking to bolton smaller acquisitions to beef up specialist business areas.

Just yesterday, South African billionaire Christo Wiese forked out £780m for a stake in discount fashion retailer New Look, which has seen Permira and Apax sell down their holding.

Such cross-border deals are expected to pick up further, with advisers at EY highlighting increased risk appetite among UK dealmakers for transactions overseas. It reckons three-quarters of British companies believe their M&A pipelines will increase over the coming year.

Partly driving this activity is the need to innovate. Global beer giant SAB Miller snapped up tiny rival Meantime, the Greenwich- based brewer, for example. SAB had identified changing appetites for its products. Earlier this week it revealed sales of soft drinks represent 20pc of its revenues.

The Meantime deal takes the maker of Peroni and Pilsner Urquell into craft brewing as it seeks to tap into the ‘Millennial’ drinkers and female consumers.

With big corporates awash with cash and bankers keen to fuel the pipeline of transactions, more mergers and acquisitions are just around the corner.

Cycling revolution

IT IS hard to go anywhere in Britain today and not see bicycles whizzing past. Thanks to Team GB’s Olympic success and the heroes of the Tour de France, cycling is increasingly popular.

The economic benefits are numerous, and not just for the trendy purveyors of upmarket cycling apparel or the sellers of 3.6m-plus bikes each year.

National pro- cycling charity CTC reckons occasional, regular and frequent cyclists contribute a ‘gross cycling product’ of at least £3bn a year.

The benefits would be even greater if more people took to two wheels. Despite use increasing in recent years, only around 2pc of all journeys are made on bikes.

In 2013 the average number of trips taken by car or van was 380 per person, compared with just 14 by bike.

Raising the proportion of trips by bike could be worth £248bn for England alone by 2050 the CTC reckons. That’s because dependence on motorised road transport imposes significant costs on society such as congestion, road cas- ualties and pollution, not to mention the ill health suffered by people who take no exercise.

London mayor Boris Johnson has made a concerted effort to get the capital cycling. He introduced the ‘Boris bikes’ scheme and many roads are being altered to make way for a cycling superhighway that promises more protection from traffic. Other towns and cities could take note and inject more money into their economies via the cycle trade.

Lost hours

FOR people who live an hour or more away from work, cycling is unlikely to be the first choice for the daily commute, however.

Those in financial services are apparently travelling for an average of 29 miles each way, largely wasted time during which they could be earning the equivalent of 27pc of their annual salaries, according to recruiter Randstad.

City workers are among the highest-paid in Britain, which goes some way to explain why many travel the longest distances to get to the office.

Yet by some estimates the financial services sector alone is missing out on a potential £50bn of productivity lost during employees’ journey times.

Commuters will identify with the mind-numbing monotony of the trek to work, when it’s too busy to read, so crammed are carriages on public transport.

At a time when national productivity is flagging behind our European rivals, imagine if this time could be put to better use.