On Friday, U.S. drug company AbbVie (ticker: ABBV) finalized its purchase of Shire Pharmaceuticals (ticker: SHP.L) of the UK and Ireland for $54 billion. The deal is the poster child of both the hot pace of global M&A activity and the somewhat controversial trend of companies leaving the U.S. for friendlier tax regimes through “inversion” of ownership. So far this year, more than $2 trillion of global M&A deals have been announced which is the fastest pace since the halcyon days of 2007. In addition, large value deals of $10 billion or more have led the way with 21 large deals announced through the first half of the year including Reynolds American (ticker: RAI) buying Lorillard (ticker: LO), AT&T buying DirecTV (ticker: DTV) and Actavis (ticker: ACT) buying Forest Labs (ticker: FRX). If anything, the pace of M&A activity is likely to increase over the next 18 months and total deal value records may be reached. Although investing directly in M&A is difficult, holding positions in cash rich sectors ripe for consolidation and those that service deal making may reward patient investors.
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