Diva team tunes in to heightened M&A activity
Managers of the Diva Synergy fund backed by Paris-based alternative manager Bernheim, Dreyfus & Co are highly optimistic about prospects for merger and acquisition activity through the rest of 2012.
AmitShabi, co-manager of the fund said: “We really believe that all the planets are now aligned for strong M&A activity: (i) healthy balance sheets at larger global companies; (ii) a moribund but stable economy where the best opportunity for corporate growth may be through acquisitions rather than organic growth; and (iii) reasonable public company valuations.”
He will focus on investment opportunities with definable, near term catalysts. “We have demonstrated our cutting edge in extracting alpha from complex M&A situations given our contrarian fundamental approach,” says Shabi. “The evolving deal making environment (credit, regulatory, anti-trust and takeover defences) favours experienced traders applying a research based investment process.”
He points out that companies entered 2012 with record cash on their balance sheets and have been receiving no return on their cash, so CEOs will be more inclined to participate in M&A to get a return as well as increasing dividends and share buybacks.
The recent Glencore/Xstrata, Roche/Illumina, GM/Peugeot or Vodafone/Cable & Wireless deals illustrate this resurgence of corporate activity.Bernheim, Dreyfus & Co. considers recent deals have been of higher quality and safer than many undertaken between 2006 and 2008. Now, they tend to be strategic, synergetic and reasonably valued transactions.