Paul Weiss Offers M&A at a Glance for March

Global M&A activity in March 2017 was generally stronger than in February and also outperformed U.S. activity, where a decline in average deal size overshadowed an increase in the number of deals.  Globally, total deal volume, as measured by dollar value, increased by 47.3% to $299.58 billion, whereas in the U.S., a decrease in average deal size led to a 38.7% decrease in total dollar volume to $65.91 billion.  The decrease in U.S. volume came despite a 2.9% increase in number of deals to 886, which was not as strong as globally, where the number of deals increased by 15.6% to 3,469.  This pattern was largely driven by trends in strategic activity as sponsor activity was generally flat for the month.  Globally, strategic deal volume increased by 66.3% to $242.29 billion and the number of deals increased by 17.8% to 3,135.  In the U.S., strategic deal volume decreased by 43.6% to $44.34 billion, while the number of deals increased by 6.2% to 740.  Sponsor-related activity was relatively stagnant in comparison, with slight decreases in both deal volume (by 0.6% to $57.29 billion) and number of deals (by 1.8% to 334) globally and larger decreases in deal volume (by 25.3% to $21.58 billion) and number of deals (by 11% to 146) in the U.S.  Figure 1 and Annex Figures 1A-4A.

Crossborder deal volume in March 2017 experienced similar trends to the overall M&A market.  Globally, crossborder activity increased in both deal volume (by 42.8% to $116.88 billion) and number of deals (by 4.9% to 838).  In the U.S., outbound activity increased sharply in deal volume (by 302.4% to $48.37 billion), but decreased slightly in number of deals (by 2.8% to 140).  U.S. inbound deal volume decreased in both deal volume (by 45.8% to $21.51 billion) and number of deals (by 8.5% to 150).  Figure 1 and Annex Figures 5A-7A.  In U.S. outbound activity by volume, the Netherlands claimed the lead for March 2016 ($25.16 billion), driven by PPG Industries, Inc.’s pending $25 billion acquisition of Akzo Nobel NV and ousted the U.K. from its spot as the 12-month leader ($74.24 billion).  Also noteworthy in U.S. outbound activity by volume, for the first time since the inception of this publication (April 2012), both Mozambique and the United Arab Emirates were among the top 5 countries of destination (ranking 3rd, with $2.80 billion in volume and 5th, with $0.65 billion in volume, respectively).  As for U.S. inbound activity by volume, Canada was the leading country of origin in deal volume ($6.51 billion for February 2017), while the U.K. maintained its 12-month lead ($103.35 billion).  Canada was also the leading country of origin for U.S. inbound activity by number of deals in March 2017 (40), and maintained its 12-month lead (431).  Figures 3 and 5.

Oil & Gas remained the most active target industry in the U.S. by deal volume ($11.39 billion).  Computers & Electronics remained the most active target industry in the U.S. by number of deals (254) and maintained its position as the most active target industry for the last 12 months, as measured by both volume ($298.84 billion) and number of deals (2,520).  Figure 2.

Turning to U.S. public merger terms, average target break fees remained at 3.7% in March 2017 (near the 12-month average of 3.6%), while average reverse break fees edged closer to the 12-month average (4.7%, as compared to 5.4%).  Figures 6 and 7.  The use of cash consideration in March 2017 (66.7%) was slightly above the 12-month average (63.4%).  Figure 9.  The incidence of tender offers as a percentage of U.S. public mergers (50%) was well above the 12-month average (25.1%).  Figure 11.  Finally, the percentage of hostile offers as a percentage of U.S. public mergers (33.3%) was also well above the 12-month average (12.9%).  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 (April 2017),” dated April 14, 2017, and available here.

Leave a Reply

Your email address will not be published. Required fields are marked *