ZEW-ZEPHYR M&A Index - Worldwide M&A Activities Regress in the Third Quarter of 2007

Worldwide mergers and acquisitions activities have further decreased in the third quarter of 2007. The ZEW-ZEPHYR M&A Index regressed by 17 points and stands at 120 points in September 2007. In August 2007 the Index was at 137 points, in July it was even up to 143 points.

Although the Index currently stands significantly above its starting level of 100 points in January 2000, the distance between this quarter’s level and the highest levels so far, in January 2001 (156 points), and July and December of 2005 (each at 150 points), has increased. The trend for the coming months is unclear. On the one hand, excellent economic data and a positive market segment offer good medium-term prospects for a renewed recovery of the M&A market. On the other hand however, the consequences of the American subprime crisis – which can still not yet be fully predicted – may lead to disturbances across the world and thereby also hinder M&A activities.

The ZEW-ZEPHYR M&A Index, which the Centre for European Economic Research (ZEW) and Bureau van Dijk Electronic Publishing (BvDEP) calculate every month, tracks the development of merger and acquisition transactions concluded worldwide from the start of the year 2000 onwards. The ZEW-ZEPHYR M&A Index is calculated on the basis of both the number and the volume of mergers and acquisitions concluded worldwide, as recorded in BvDEP’s ZEPHYR Database. The index uses the monthly rates of change of both the volume and value of M&A transactions, combined and adjusted for volatility. As a result, the index offers a much more precise picture of the level of M&A activity in the world than can be attained by observing transaction values alone. The reason for this is that a firm’s value on the stock exchange has a strong influence on the transaction value, particularly as many acquisitions are paid for by means of an exchange of shares. The consequence of this is that the share price could have a disproportionately strong influence on estimations of the trends in M&A transactions. If, however, the total value is spread over a larger volume of transactions within the month, this increases the value of the M&A Index, although the aggregate transaction value remains unchanged.

For further information please contact

Prof. Dr. Christoph Grimpe, E-mail: grimpe@zew.de