Mergers & Acquisitions
TPG Capital abandoned its $818 million bid for hedge fund administrator GlobeOp Financial Services, while petrochemical manufacturer and supplier Westlake Chemical Corp. also announced last week that it withdrew a $1.2 billion offer to acquire Georgia Gulf Corp. Georgia Gulf has fallen 16% in the absence of a buyer, while GlobeOp hovers near a recent high of $5 as software provider SS&C Technologies Holdings Inc. stepped in to buy the London-listed fund administrator.
Still, $82 billion worth of deals were announced last month, almost double the $43 billion recorded in March, but behind last April’s $91.7 billion. The April deals brought the total so far this year to over $233 billion as of April 31, according to data provider Dealogic, compared to the $325.3 billion during the first four months of 2011.
April started with Justice Holdings $1.4 billion acquisition of a stake in Burger King Holdings Inc. and ended on a high note with Nestle S.A.’s $11.85 billion bid for Pfizer Inc.’s baby food business.
Event-driven strategy ranks among the best performers this year through April with 3.73% gains, trailing just behind convertible arbitrage managers’ 5.91% increase.
Carrie McCabe, founder and chief executive of Lasair Capital LLC, an institutional equity long/short investor that employs seven hedge fund managers, said she expects more gains from increased corporate transactions.
“Under the Volcker rule, many Wall Street firms are no longer trading merger arbitrage on their proprietary trading desks, helping spreads to widen,” she said.
Average hedge fund managers lost 0.33% and the Standard & Poor’s 500 index declined by 0.7%.
“Managers suffered from the weakness in equity markets, which not only prolonged the dearth of deal activity but also led to mark-to-market losses on existing positions,” it said.
Read More: WSJ