Paul Weiss Offers M&A at a Glance for April

Global M&A activity in April 2017 declined by most measures from its March 2017 level, while the U.S. showed more mixed results. Globally, total deal volume, as measured by dollar value, decreased by 16.6% to $253.91 billion, whereas in the U.S., a large increase in average deal size led to a 58.4% increase in total dollar volume to $108.11 billion. The increase in U.S. volume came despite a 27.1% decrease in number of deals to 669, similar to the global decrease of 25.3% to 2,708 (a new 12-month low for number of deals globally).

Strategic vs. Sponsor Activity

Strategic activity largely drove the changes in M&A activity. Globally, strategic deal volume decreased by 17.6% to $202.96 billion and the number of deals decreased by 26.5% to 2,414. In the U.S., strategic deal volume increased by 92.3% to $87.09 billion, though the number of deals decreased by 29.6% to 540. Sponsor-related activity saw decreases in both deal volume (by 12.4% to $50.96 billion) and number of deals (by 13.8% to 294) globally and decreases in deal volume (by 8.41% to $21.02 billion) and number of deals (by 14.6% to 129) in the U.S. Figure 1 and Annex Figures 1A-4A.

Crossborder Activity

Crossborder deal volume in April 2017 decreased across all measures except for U.S. inbound deal volume. Globally, crossborder activity decreased in both deal volume (by 41.6% to $69.95 billion) and number of deals (by 26.9% to 631). In the U.S., outbound activity decreased sharply in deal volume (by 83.1% to $8.55 billion), and also decreased in number of deals (by 25.5% to 105). U.S. inbound activity increased in deal volume (by 28.1% to $26.98 billion) but decreased in number of deals (by 28.9% to 108). Figure 1 and Annex Figures 5A-7A. In U.S. outbound activity by volume, the U.K. claimed the lead for April ($5.43 billion), and the Netherlands maintained its spot as the 12-month leader ($75.64 billion). In U.S. outbound activity by number of deals, Canada was the leading country of destination in April 2017 (20), while the U.K. maintained its 12-month lead (331). As for U.S. inbound activity by volume, Luxembourg was the leading country of origin in deal volume ($7.52 billion for April 2017, driven by JAB Holding Co. SARL’s pending $7.49 billion acquisition of Panera Bread Company), while the U.K. maintained its 12-month lead ($100.52 billion). Canada was the leading country of origin for U.S. inbound activity by number of deals in April 2017 (27), and maintained its 12-month lead (425). Figures 3 and 5

U.S. Deals by Industry

Healthcare took over Oil & Gas as the most active target industry in the U.S. by deal volume ($37.25 billion) due to Becton, Dickinson & Co.’s offer to acquire C.R. Bard, Inc. for $22.96 billion. Computers & Electronics remained the most active target industry in the U.S. by number of deals (184) and maintained its position as the most active target industry for the last 12 months, as measured by both volume ($303.17 billion) and number of deals (2,539). Figure 2.

U.S. Public Mergers

Turning to U.S. public merger terms, average target break fees were 3.4% in April 2017 (near the 12-month average of 3.6%), while average reverse break fees edged closer to the 12-month average (5.0%, as compared to 5.4%). Figures 6 and 7. The use of cash consideration in April 2017 (50%) was below the 12-month average (64.1%). Figure 9. The incidence of tender offers as a percentage of U.S. public mergers (14.3%) was also below the 12-month average (24.5%). Figure 11. Finally, no hostile offers were reported in April 2017 (as compared to the 12-month average of 11.8%). Figure 12.

The figures reference above are all available here.

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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 (May 2017),” dated May, 15 2017, and available here.