Mergers, Acquisitions Activity in Arkansas Quickens

by Jan Cottingham  on Monday, Jan. 23, 2012 12:00 am  

Deal-making in Arkansas picked up the pace last year, continuing a trend set in 2010.

And purchases by Wal-Mart Stores Inc. underscored the Bentonville-based retailer's "commitment to social and mobile commerce." Translation: Look out, Amazon.

That interpretation was bolstered by Wal-Mart's announcement last week of its new president and CEO of global e-commerce, Neil Ashe, former president of CBS Interactive.

The biggest deal by far in 2011 was the purchase of Chesapeake Energy Corp.'s Fayetteville Shale assets by Australian conglomerate BHP Billiton Ltd. for $4.75 billion. That topped by $55 million the biggest deal in Arkansas in 2010: Zurich-based ABB Ltd.'s acquisition of Baldor Electric Co. of Fort Smith for $4.2 billion.

(To see the list of biggest deals in 2011, click here. To see the list of Arkansas Finance Development Authority bond issues, click here.)

The 2011 dollar total of mergers and acquisitions also easily surpassed that of 2010. Arkansas Business again examined deals whose worth was reported or estimated to be $9 million or higher. In 2010, the 48 deals whose value could be determined totaled $12.69 billion. In 2011, with only 42 deals valued at $9 million or more, the total was $15.18 billion.

The number of big deals also jumped, from 64 in 2010 to 70 in 2011. These increases came even though Arkansas Business sought to tighten the criteria for "big deals," generally limiting them to announcements of a buyer and a seller.

Previous lists, including last year's, have featured new plants and new construction and plant and other capital expansions. Had those type of deals been a part of this year's list, the value and volume of 2011 "deals" would have been even higher.

The list also indicates M&A trends in Arkansas-based companies or companies with sizable assets in the state. Among the most significant in 2011:

  • Wal-Mart more than doubled its known deal-making year over year, from five in 2010 to 11 last year. In addition, the retail behemoth appeared to focus on streamlining its grocery store business while snapping up technology companies.
  • Energy-related deals feature prominently on the list.
  • Digital and tech companies showed strong activity.
  • Banks also stayed in acquisition mode though not as feverishly as in 2010 (see sidebar).

The picture in Arkansas differed somewhat from M&A activity globally last year.
The first half of 2011 saw strong deal-making action worldwide, but Europe's debt troubles weighed on the second half of the year. Thomson Reuters data show a 7.6 percent increase in M&A volume worldwide last year, to $2.54 trillion, compared with 2010.

In the United States, "M&A activity increased approximately 16 percent to $722 billion in 2011, while the number of transactions only increased about 1 percent to 6,454, driven by pent-up demand for transactions among both sellers of businesses looking for liquidity and buyers looking for growth and scale," said Marshall McKissack, who heads the mergers and acquisitions practice of Stephens Inc. of Little Rock. Stephens, though based in Arkansas, does business far be-yond the state's borders.

Relatively inexpensive debt capital remains abundant for those with good credit, he said. "Valuations in general have in-creased, based on high demand for quality businesses and abundance of capital chasing those deals."



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