Paul Weiss Offers M&A at a Glance for May

M&A activity showed mixed results in May 2017, with similar trends to April’s figures, both in terms of deal volume and number of deals.
Globally, total deal volume, as measured by dollar value, increased by 6.9% to $274.05 billion and the number of deals increased by 7.9%
to 3,145. In the U.S., although the number of deals increased by 9.4% to 816, a decrease in average deal size led to a 6.0% decrease in total
deal volume to $102.13 billion.

Strategic vs. Sponsor Activity

Sponsor-related activity rebounded in May (with all metrics nearing or marking their 12-month high), but strategic activity had
mixed results. Globally, strategic deal volume decreased by 7.7% to $189.27 billion, while the number of deals increased by 6.7% to
2,780. In the U.S., strategic deal volume decreased by 45.9% to $47.16 billion, while the number of deals increased by 7.7% to 656.
Sponsor-related activity, both globally and in the U.S., saw significant increases in deal volume (by 65.3% to $84.77 billion and
156.6% to $54.97 billion, respectively) and in number of deals (by 18.1% to 365 and 16.8% to 160, respectively). Figure 1 and Annex
Figures 1A-4A.

Crossborder Activity

Crossborder activity increased globally by both deal volume (by 22.4% to $92.73 billion) and number of deals (by 8.3% to 746). In the
U.S., outbound activity decreased by both deal volume (by 10.2% to $6.46 billion) and number of deals (by 14.2% to 97). U.S. inbound
activity similarly decreased by both deal volume (by 20.1% to $21.76 billion) and number of deals (by 0.8% to 126). Figure 1 and Annex
Figures 5A-7A.
In U.S. outbound activity, the Netherlands claimed the lead for May in deal volume ($3.29 billion) and Canada held onto its lead in
number of deals (16). The U.K. overtook the Netherlands’ briefly-held position as the 12-month leader in outbound deal volume
($55.45 billion), and maintained its 12-month lead in number of deals (322). As for U.S. inbound activity, Switzerland was the leading
country of origin in deal volume for May ($10.30 billion, driven primarily by Clariant AG’s pending $6.59 billion acquisition of
Huntsman Corp.), while the U.K. maintained its 12-month lead ($103.11 billion). Canada was the leading country for inbound number
of deals, both in May (28) and over the last 12 months (420). Figures 3 and 5.

U.S. Deals by Industry

Healthcare was the most active target industry in the U.S. by deal volume ($24.33 billion). Computers & Electronics remained the
most active target industry in the U.S., with 259 deals in May, and maintained its position as the most active target industry for the last
12 months, as measured by both volume ($271.73 billion) and number of deals (2,604). Figure 2.

U.S. Public Mergers

With respect to U.S. public merger terms, average target break fees were 3.3% in May (near the 12-month average of 3.5%), while
average reverse break fees edged closer to the 12-month average (4.9%, as compared to 5.4%). Figures 6 and 7. The use of cash
consideration in May (44.4%) was below the 12-month average (62.4%). Figure 9. The incidence of tender offers as a percentage of
U.S. public mergers (16.7%) was also below the 12-month average (24.3%). Figure 11. Finally, hostile offers were reported in 5.3% of
U.S. public mergers in May 2017 (as compared to the 12-month average of 11.1%). 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 (June 2017),” dated June, 15 2017, and available here.

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