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International deal-making above $2 trillion, on tempo to smash information

An employee preps a diesel locomotive for painting at the General Electric Manufacturing Solutions facility in Fort Worth, Texas.

Rex C. Curry | Bloomberg | Getty Images

Worldwide dealmaking for 2018 topped the $2 trillion mark this week, on track for the biggest year for mergers and acquisitions ever, according to data from Thomson Reuters Deals Intelligence.

Global mergers and acquisitions had their strongest start to a year ever, totaling $1.2 trillion in the first quarter and that action has continued in the second quarter. Media, telecom, consumer staples, healthcare and retail sectors have been especially hot.

This week began with a standout “Merger Monday” of announced deals:

General Electric confirmed it will merge its transportation business with U.S. manufacturer Wabtec in an $11.1 billion deal. Data firm IHS Markit said it will buy smaller rival from private-equity funds of Blackstone and Goldman Sachs for $1.86 billion, and U.S. regional bank Fifth Third Bancorp announced a $4.7 billion deal to buy MB Financial. Meanwhile, Blackstone said it would buy U.S. hotel owner LaSalle Hotel Properties for $3.7 billion.

Global deals year-to-date

Source: Thomson Reuters Deals Intelligence Data as of May 21, 2018

Tax cuts helped set the stage for the recent boom in deals.

The Republican tax reform bill, which was signed by President Trump in December, lowered the corporate tax rate to 21 percent from 35 percent and made it cheaper for multinational companies to repatriate foreign cash. Companies have been putting putting the extra savings to work with additional investments.

The value of M&A deals globally increased 67 percent year-on-year in the first quarter, Thomson Reuters data shows but the number of deals dropped by 10 percent, reflecting that the average size of deals is getting bigger.

Among the mega- deals this year; U.S. health insurer Cigna Corp said it will acquire U.S. pharmacy chain Express Scripts for $67 billion, and German utility E.ON SE announced a $38.5 billion deal to buy RWE AG’s renewable energy business.

On the regulatory front though, there is still uncertainty. The U.S. Department of Justice sued to block AT&T’s $85 billion deal to buy Time Warner over antitrust concerns, and later called the deal “illegal” and “harmful” to consumers.

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