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Global: M&A deal leaks on the rise despite crackdown by regulators

 |  January 18, 2017

Despite regulators’ best efforts, the upside from leaking corporate deals still appears too great to resist for some corporate advisers.

According to a report being released today, the percentage of mergers and acquisition deals leaked prior to public announcement in 2015 increased to 3 per cent, from 2 per cent in 2014.

The report from data room provider Intralinks found that leaked deals often resulted in higher deal prices, with the global median takeover premium for targets in leaked deals at 53 per cent, compared with 24 per cent for other transactions, the highest difference for four years.

Leaking also led to a higher incidence of targets attracting rival bids, partly explaining the better eventual price received.

“For some, the potential benefits of leaking a deal still appear to outweigh the risks,” said Philip Whitchelo, Intralinks vice-president of strategy and product ­marketing. “Despite increasing scrutiny and regulation, this research shows there are still obvious benefits associated with leaking a deal, including encouraging rival bids and boosting the value of bids.”

Despite the uptick in leaking, the report found Australia remained one of the strongest markets for containing sensitive information, with only France and Germany having fewer leaks.

India experienced the most, followed by Hong Kong, the US, Canada and Britain, according to Intralinks’ annual report. The data defies some longstanding perceptions that Australia was one of the “leakiest markets” in the world.

Globally, deal leaks increased to 8.6 per cent of all M&A transactions in 2015 from 6 per cent in 2014 and an average of 7.5 per cent in the prior six years, based on Intralinks’ analysis of 5024 deals announced during the period.

By sector, leaks were most common in real estate takeovers.

Full Content: Reuters

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