Increased M&A activity predicted for '10

Financing remains a challenge, according to PwC

Mergers and acquisitions activity will pick up in 2010, and the media and entertainment space could be one of the key areas of deal activity, PricewaterhouseCoopers' Transaction Services practice predicted Wednesday.

Attractive prices for buyers and a need for added revenue and efficiencies could be drivers of M&A activity across such diverse sectors as automotive, finance, healthcare, energy and media/entertainment, it said.

Deal momentum has picked up in the second half of 2009, including in the entertainment space where Walt Disney has agreed to acquire Marvel and Comcast has struck a deal to take a majority stake in NBC Universal, among others. Also, MGM could get new owners in 2010.

"Despite a sluggish economy, the entertainment and media sector still managed to pull off several high-profile entertainment deals in the second half of 2009," PwC said. "Look for strategic buyers to focus their efforts on content- and distribution-oriented acquisitions, both domestically and internationally, in response to favorable pricing in the market, as well as continuing to explore new media opportunities."

While credit markets have thawed, financing will remain a key challenge to M&A activity across sectors next year, according to PwC. That leaves strategic buyers with strong balance sheets and robust cash reserves best positioned for deals.

"Those who have built their balance sheets for a rainy day might come out of last year's storm to find the rainbow, and at the end of it, nicely-valued acquisition targets that provide opportunities for revenue growth and enhanced productivity," said Bob Filek, partner with PwC Transaction Services. "The 'merger of productivity' will be a driving force in 2010 as companies look to drive revenue growth and enhance margins."

Through the first 11 months of 2009, there were 6,772 deals worth a total of $614 billion, compared with 8,890 transactions worth $1 trillion during the same period last year, according to Thomson Reuters data cited by PwC. The firm didn't break out data for the media and entertainment industry.
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