NVS Novartis AG

By Dana Cimilluca 

DAVOS, Switzerland--Prospects for deal-making remain bright, the chief executives of some of the world's biggest companies said, in a sign that market turmoil may not derail the mergers-and-acquisitions boom.

The heads of Cisco Systems Inc., AT&T Inc. and Novartis AG indicated they or others in their respective industries will likely continue hunting for deals, even after stock and other markets dropped precipitously this year.

"I do think this is going to be a year of increased consolidation," Joseph Jimenez, CEO of drug company Novartis, said in an interview at the World Economic Forum's annual event here. Novartis itself is targeting smaller deals, of around $2 billion to $3 billion, he added.

Chuck Robbins, chief executive of Cisco, the acquisitive networking giant, said the recent market swoon presents a buying opportunity.

"Frankly, for us, as someone who has leveraged M&A activity as we've expanded into other markets, when valuations become more realistic as a strategic buyer, then that's positive for us," Mr. Robbins said in an interview here.

The opportunity extends to venture-capital-funded tech companies, he said, the number of which sporting billion-dollar valuations has surged in recent years.

"If you look at particularly the private market in Silicon Valley, it had gotten fairly rich," Mr. Robbins added. "These things are always cyclical and I think that we've seen the cyclical side where the markets have gotten a little tougher and it's created some downward pressure on some of those valuations."

He wasn't specific about any companies Cisco, which has a $116 billion market value, may be targeting, though he said data analytics and security are areas of interest.

Meanwhile, AT&T Chief Executive Randall Stephenson in an earlier interview also sounded a note of optimism. AT&T, the largest U.S. telecommunications company by revenue and also one of the biggest corporate acquirers historically, notched some $85 billion of takeovers last year, including the completion of its $49 billion combination with satellite-television provider DirecTV, two deals in Mexico and the purchase of $18 billion in wireless spectrum for video use, he said.

"The industry is going through a lot of change and when an industry goes through change, the parts move around and M&A does tend to happen," Mr. Stephenson said. "The industry hasn't finished changing. It's going through some serious and significant changes on both the media and content side as well as the distribution side."

Healthcare was the most active sector for M&A last year, followed by technology, with companies in the industries striking $704 billion and $615 billion of deals, respectively, according to Dealogic. In all, companies around the world struck about $4.7 trillion of mergers, more than in any other year. Bullish comments from chiefs in industries that have been the most active in M&A could bode well for deals at a time when steep declines in stocks, commodities and other markets have raised questions about whether the M&A boom is sustainable.

Not every corporate chieftain is expected to continue to prop up the M&A market. Bill McDermott, chief executive of SAP AG, said the big software maker's focus is on integrating prior acquisitions rather than striking big new ones.

"We don't need big-scale M&A," Mr. McDermott said in another interview here, citing the complexity and cost of large deals. "Even if there was a great target out there -- and there isn't one for us--you have to make sure there's mindspan for it."

Sam Schechner and Rebecca Blumenstein contributed to this article.

Write to Dana Cimilluca at dana.cimilluca@wsj.com

(END) Dow Jones Newswires

January 22, 2016 11:38 ET (16:38 GMT)

Novartis (NYSE:NVS)
Historical Stock Chart
From Mar 2024 to Apr 2024

Novartis (NYSE:NVS)
Historical Stock Chart
From Apr 2023 to Apr 2024