Paul Weiss Offers M&A at a Glance for June

M&A activity in June 2017 struggled to build upon any recent favorable indicators. Globally, total deal volume by dollar value decreased from May 2017 volume by 3.5% to $263.00 billion, and the number of deals decreased by 5.8% to 3,116. The market’s downward trend was more pronounced in the U.S., where total deal volume by dollar value decreased over the same period by 8.1% to $94.44 billion, and the number of deals decreased by 21.7% to 662.

Strategic vs. Sponsor Activity

Sponsor-related activity, both globally and in the U.S., slipped from its strong performance in May, decreasing in total dollar value by 3.5% to $78.32 billion and 26.8% to $40.31 billion, respectively, and in number of deals by 27.3% to 269 and 42.3% to 94, respectively. Global strategic activity experienced similar declines, with deal volume as measured by dollar value decreasing by 3.5%
to $184.68 billion and number of deals decreasing by 3.1% to 2,847. Although the number of U.S. strategic deals decreased by 16.7% to 568, total dollar value increased by 13.5% to $54.13 billion. Figure 1 and Annex Figures 1A-4A.

Crossborder Activity

Global crossborder activity decreased both in total dollar value (by 20.0% to $75.29 billion) and in number of deals (by 3.2% to 757). In the U.S., although inbound activity decreased both in total dollar value (by 44.8% to $12.32 billion) and in number of deals (by 6.8% to 123), outbound activity increased in total dollar value by 95.8% to $13.16 billion and number of deals by 34.0% to 138. Figure 1 and Annex Figures 5A-7A.

In U.S. outbound activity, Germany led by total dollar value in June 2017 ($6.79 billion), while Canada held onto its lead in number of deals (27). Germany overtook the U.K.’s briefly-held position as the 12-month leader in outbound deal volume ($58.08 billion), although the U.K. maintained its 12-month lead in number of deals (312). As for U.S. inbound activity, Canada was the leading country of origin by total dollar value for June ($3.00 billion), while the U.K. maintained its 12-month lead ($105.26 billion). Canada was the leading country for inbound number of deals, both in June (31) and over the last 12 months (409). Figure 3.

U.S. Deals by Industry

Retail was the most active target industry in the U.S. by dollar value ($19.51 billion, driven primarily by Amazon.com, Inc.’s pending acquisition of Whole Foods Market, Inc. for $13.43 billion). Computers & Electronics remained the most active target industry in the U.S. by number of deals in June (169), and maintained its position as the most active target industry for the last 12 months, as
measured by both dollar value ($216.24 billion) and number of deals (2,550). Figures 2 and 5.

U.S. Public Mergers

Turning to U.S. public merger terms, average target break fees and reverse break fees neared their 12-month averages, and were 3.4% and 5.7%, respectively, for the month of June 2017. Figures 6 and 7. The use of cash consideration in June (75.0%) was above the 12-month average (62.9%). Figure 9. The incidence of tender offers as a percentage of U.S. public mergers (18.8%) was below the 12-month average (21.5%). Figure 11. Finally, hostile offers were reported in 5.6% of U.S. public mergers in May 2017 (as compared to the 12-month average of 9.4%). 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 (July 2017),” dated July, 15 2017, and available here.

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