Paul Weiss Offers M&A at a Glance for November

After the spike in activity due to megadeals in October, M&A activity returned in November to more normalized levels both in deal volume and number of deals. Total deal volume in the U.S. and globally declined in November 2016, by 56.1% to $154.31 billion and by 37.5% to $352.27 billion, respectively.  The number of deals recovered somewhat from near record-low territory in October, with U.S. deals increasing by 9.5% to 774 and global deals by 10.7% to 3,095. These trends were primarily driven by a return to the norm in the level of strategic megadeal activity (as compared to October).  Strategic deal volume decreased in the U.S. by 62.8% to $116.43 billion and globally by 43.0% to $277.00 billion.  The number of strategic deals increased in the U.S. by 11.1% to 633 and globally by 12.4% to 2,773.  Sponsor-related activity remained largely the same as in October, both in terms of deal volume (decreasing by 1.0% to $37.87 billion in the U.S. and by 3.6% to $75.26 billion globally) and in terms of number of deals (141 in the U.S and 322 globally).  Figure 1 and Annex Figures 1A-4A.

Crossborder deal volume followed a similar trend in November.  Outbound U.S. deal volume decreased by 91.7% to $5.11 billion, while the number of deals increased by 27.6% to 157.  Inbound U.S. deal volume decreased by 71.7% to $29.64 billion, while the number of deals increased by 25.0% to 150.  Globally, crossborder deal volume decreased by 64.0% to $76.66 billion, while the number of deals increased by 24.5% to 833.  Figure 1 and Annex Figures 5A-7A.  The U.K. claimed the lead for monthly outbound U.S. activity by volume in November 2016 ($1.25 billion), but the Netherlands overtook the U.K. as the 12-month leader ($49.56 billion).  As for inbound activity, South Korea overtook the U.K. as the leading country of origin in deal volume in November 2016 ($8.96 billion), while Canada maintained its 12-month lead ($115.34 billion).  Figure 3.

Utility & Energy was the most active target industry by deal volume in the U.S. in November 2016 ($55.25 billion), boosted by Sunoco Logistics Partners LP’s $21.39 billion offer to acquire Energy Transfer Partners, L.P. (the largest U.S. public merger in November 2016).  Computers & Electronics remained the most active target industry by number of deals for the month (209) and maintained its position as the most active target industry for the last 12 months, as measured by both volume ($287.46 billion) and number of deals (2,510).  Figure 2 and Figure 5.

With respect to U.S. public mergers, break fees expectedly remained in line with historical levels, while reverse break fees were at a 12-month high.  Figures 6-7.  The use of cash consideration in November rebounded to approximately its 12-month average (61.1%, as compared to a 12-month average of 62.2%), which was a significant increase from October levels.  Figure 9.  The incidence of tender offers as a percentage of U.S. public mergers was 11.1% (as compared to its 12-month average of 20.5%), which was higher than the incidence of tender offers in October but lower than its 12-month average. Figure 11. Finally, the percentage of hostile offers as a percentage of U.S. public mergers was 5%, well below its 12-month average of 13.8%.  Figure 12.

The figures reference above are all available here.

Additionally, you can find a video summary of this post here.

This post comes to us from Paul, Weiss, Rifkind, Wharton & Garrison LLP. It is based on the firm’s memorandum, “M&A at a Glance (December 2016),” dated December 16, 2016, and available here.