Shifting tax bases has been a big driver in M&A this year

2015 was a record year for mergers and acquisitions, with the total deal value pushing $US4.9 trillion, according to a report from McKinsey and Company.

This is a record year not just in the total value of deals, which have finally surpassed 2007 highs, both in volume and value, but in the regional breakdown as well.

For the first time Asia has tied Europe in M&A activity. Asian M&A activity has almost doubled since 2007.

This year alone, Asia is set to see a 60% increase in M&A, year-on-year.

A lot of deals were fuelled by attempts to shift tax bases, such as the $US53 billion purchase of Irish drugmaker Shire by AbbVie, or Mylan’s $US5.3 billion acquisition of Abbott Laboratories, and the attempted takeover of AstraZeneca by Pfizer.

On the Australian front, shareholders in Toll Holdings agreed to a $6.5 billion acquisition by Japan Post. And Canada’s Brookfield Asset Management has made a $8.9 billion takeover offer for Asciano, another Australian logistics company. The deal is not yet across the line.

Beach Energy and Drillsearch are set to merge, creating Australia’s largest onshore oil producer with a market cap of $1.16 billion. And in September telecomTPG snapped up iiNet for $1.56 billion.

But the increase in M&A activity has been driven largely by big deals mostly overseas. The amount of deals between $US5 and $US10 billion are up 24% this year.

Like the $US65 billion takeover of cloud computing company EMC by Dell. And the $US70 billion Shell takeover of BG Group which has recently received regulatory clearance.

Belgian beer giant Anheuser-Busch InBev is currently clearing the regulatory hurdles for its $US106 billion purchase of British-South African brewer SABMiller.

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