Paul Weiss Offers M&A at a Glance for February

M&A activity generally declined in February 2017, both globally and in the U.S.  Total deal volume, as measured by dollar value, decreased globally by 30.1% to $202.45 billion, and in the U.S. by 3.7% to $106.47 billion.  The number of deals followed similar trends, decreasing globally by 8.4% to 2,858 and decreasing in the U.S. by 10.2% to 828. These declines were primarily driven by declines in strategic M&A activity. Globally, strategic deal volume decreased by 40.6% to $144.56 billion and the number of deals decreased by 10.4% to 2,520. In the U.S., strategic deal volume decreased by 2.7% to $77.63 billion, and the number of deals decreased by 16.0% to 666. Sponsor-related activity generally fared better than strategic activity, with global increases both in deal volume (by 25.3% to $57.88 billion) and in number of deals (by 10.1% to 338). Although U.S. sponsor-related deal volume decreased slightly (by 6.3% to $28.84 billion) the number of sponsor-related deals in the U.S. increased significantly (by 25.6% to 162).   Figure 1 and Annex Figures 1A-4A.

Crossborder deal volume in February 2017 showed mixed results.  Global crossborder activity decreased both in deal volume (by 30.7% to $81.68 billion) and in number of deals (by 5.8% to 761). Outbound U.S. activity also decreased both in deal volume (by 70.9% to $11.84 billion) and in number of deals (by 17.9% to 133), however, inbound U.S. deal volume increased both in deal volume (by 92.3% to $39.73 billion) and in number of deals (by 11.5% to 155). Figure 1 and Annex Figures 5A-7A.  Germany claimed the lead for monthly outbound U.S. activity by volume in February 2017 ($2.73 billion) and the U.K. maintained the top spot as the 12-month leader ($62.96 billion).  For the first time since the inception of this publication (April 2012), Saudi Arabia was among the top 5 countries of destination for monthly outbound U.S. activity by volume (ranking 3rd, with $2.21 billion in volume, which is attributable to Tronox Ltd’s offer to acquire the titanium dioxide (TiO2) business of National Titanium Dioxide Co Ltd.).  As for U.S. inbound activity, the U.K. was the leading country of origin in deal volume ($19.11 billion for February 2017 and 103.64 for the past 12 months), while Canada was the leading country of origin by number of deals (36) in February 2017, and maintained its 12-month lead (415 deals).  Figures 3 and 5.

Oil & Gas was the most active target industry by deal volume, as measured by dollar value, in the U.S. in February 2017, at $22.03 billion. Computers & Electronics was the most active target industry by number of deals in the U.S. in February 2017 (205 deals) and maintained its position as the most active target industry for the last 12 months, as measured by both volume ($297.08 billion) and number of deals (2,455).  Figure 2.

With respect to U.S. public mergers, average deal value increased by 39.1% to $2.49 billion.  Figure 6.  The average of target break fees remained near its 12-month figure at 3.7%, while the average of reverse break fees was at 4.4% (below the 12-month average of 5.4%).  Figures 6 and 7.  The use of cash consideration in February 2017 (62.5%) remained close to its 12-month average (64.2%).  Figure 9.  The incidence of tender offers as a percentage of U.S. public mergers (18.8%) was below its 12-month average (23.8%).  Figure 11.  Finally, the percentage of hostile offers as a percentage of U.S. public mergers (5.9%) was also below its 12-month average (12.8 %).  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 (March 2017),” dated March 15, 2017, and available here.

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