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BLOG: CFOs ponder M&A as Apple's billions hint at future deals

Jonny Evans | Jan. 27, 2012
Apple now holds $97.6 billion in cash, enough to purchase Sony five times over -- and seems set to use some of it for strategic acquisitions. Does this reflect a new phase of consolidation as M&A activity intensifies? Or is the company bucking a highly conservative trend?

Consolidation and Industry Change

Given the economic situation, firms seeking growth may consider M&A activities. Nitin Kumar, who serves as Strategic Advisor to the Board for Association of Due Diligence Professionals, told IB Times that three drivers will govern such activities.

  • Because things are sluggish, many companies are available at relatively low cost.
  • Private equity funds are sitting on mountains of cash, though due diligence has become a lot stricter than before.
  • Currency volatility is also creating unexpected bargains, bringing hitherto unachievable deals within reach.

Kumar's commentary seems to suggest that while 2012 won't be the busiest year for M&A, it could see some key deals. This tends to favor an expectation of some landscape-changing deals as well-heeled firms pounce on less stable but strategically important targets.

With activity focused on the mobile space, I'm predicting interesting times for RIM, and anticipate potential mergers between some of the Asian firms (LG et al), and a race to grab players in the heating-up component manufacture, cloud and connectivity markets. Of course, the question everyone will be asking for the next few weeks must be: "Who is Apple eyeing up?"

 

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