If the White House is looking for advice on how to avoid leaks, then it shouldn't turn toward Wall Street.
Prior to M&A announcements, details of the deal are more often than not leaked, Gadfly's Gillian Tan
commented. Although to Wall Street bankers' credit, sometimes the leak does come from the would-be acquirer, an activist
shareholder or other parties who have an incentive to leak the information to a reporter. On the other hand, a leak could occur by
pure chance, Tan added. There is at least one instance where details of a transaction were merely overheard in the public
subway.
But do investors really care about leaks? Probably not. Deals that are leaked first tend to finalize at a richer premium
compared to deals where there are no leaks, Tan emphasized. In fact, with the permission of the company, M&A advisers and
bankers may even let some of the details slip out early.
The degree of leaking does vary by sector, Tan also noted. For instance, 15.5 percent of all deals in the consumer sector in
2016 was leaked, which is the highest rate. The lowest rate of leaks in 2016 occurred in the healthcare sector at 5.0 percent.
Finally, one of more notable potential deal that could occur andwas
leaked is Unilever plc (ADR) (NYSE: UL)'s potential
acquisition of Estee Lauder companies Inc (NYSE: EL). But
if this transaction doesn't result in a sale of the beauty company, then it could result in another leaked
M&A deal attempting to come back to life ‐ Kraft Heinz Co (NASDAQ: KHC) acquiring the England-based company.
But this time around, "you can bet that involved parties will try their darnedest to plug leaks," Tan concluded.
Related Links:
Wall
Street's M&A Chatter From August 28: Gilead-Kite Pharma, Enzymotec-Frutarom, MaxPoint-Valassis
Gadfly's Tan:
TripAdvisor Is Finally 'Laying The Groundwork' To Be Acquired
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