Mergers and acquisitions in California come to a standstill

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An economic slowdown might seem to be a good time for big, hungry companies to acquire smaller ones. Small companies, weakened by a recession, might be more amenable to merging. They might be cheaper too.

But merger and acquisition activity in California in the first nine months of 2010 was down 42% from the same period last year, according to a report from the Mergermarket Group. The period covering the first through third quarters was the lowest for mergers and acquisitions, by value, since 2004.

In that time period, the vast majority of deals -- 46 -- were worth less than $500 million. Only three deals were worth $501 million to $1 billion.

When measured by value, more than one-third of deals in the state were in the technology, media and telecom sector, the report said. About 20% were in business services and 17% were in the biotech and medical field.

The top deal in the first three quarters was Intel Corp.’s acquisition of McAfee Inc., announced in August. The Mergermarket Group report listed the deal’s value at $6.5 billion, but Intel said it was paying $7.7 billion.

-- Alana Semuels