Paul Weiss Offers M&A at a Glance for August 2017

Global M&A activity declined in August 2017, with total deal volume, as measured by dollar value, decreasing 4.0% to $277.65 billion and the number of deals decreasing 5.6% to 3,119. The U.S. remained a bright spot in the M&A market, however, with mostly gains from July levels. In the U.S., total deal volume increased by 38.1% to $130.26 billion and the number of deals increased by 12.8% to 838.

Strategic vs. Sponsor Activity

In the U.S., strategic deal volume increased 29.3% to $78.12 billion, and the number of deals rose 8.7% to 673.  By comparison, global strategic deal volume increased by only 2.7% to $203.21 billion, and the number of global deals declined 6.8% to 2,791.   Figure 1 and Annex Figures 1A-4A. Sponsor-related activity showed the most marked differences between global and U.S. sectors, with U.S. sponsor-related deal volume and number of deals increasing considerably by 53.9% to $52.14 billion and 33.1% to 165, respectively; while global sponsor-related deal volume dropped 18.5% to $74.45 billion and number of deals increased 5.5% to 328.

Crossborder Activity

Crossborder deal volume fell to 12-month lows across multiple measures in August 2017, and the number of crossborder deals also declined. Globally, crossborder deal volume declined 48.9% to a 12-month low of $59.14 billion, and the number of deals declined 16.2% to 721. In the U.S., inbound deal volume declined to a 12-month low, falling by 33.8% to $13.34 billion, with the number of U.S. inbound deals remaining flat from the prior month at 125 transactions. Outbound U.S. deal volume declined by 58.1% to $10.44 billion and the number of outbound U.S. deals increased by a mere 1.6% to 130. Figure 1 and Annex Figures 5A-7A.

In U.S. inbound activity, Japan was the leading country of origin for August, with $6.96 billion in deal volume, propelled both by Softbank’s $1.00 billion and $1.10 billion investments in Fanatics Inc. and Roivant Sciences Inc., respectively, and also its $4.40 billion investment in WeWork Companies Inc.  The U.K. retained the lead for U.S. inbound activity by dollar value over the last 12 months, with $105.98 billion in volume.  Canada was the leading country of origin by number of inbound U.S. deals in August, with 24 transactions, and continued as the leading country of origin for the number of inbound U.S. deals over the last 12 months, with 410 transactions.  As for U.S. outbound activity, Norway led by total dollar value for the first time since the inception of this publication, with $3.38 billion in deal volume, driven entirely by TransOcean Ltd.’s pending acquisition of Songa Offshore SE.  Canada led U.S. outbound activity by number of deals, with 24 transactions.  The U.K. maintained its position as the leader in outbound deal volume and number of deals over the last 12 months, with $64.62 billion in volume and 316 deals. Figure 3.

U.S. Deals by Industry

Utility & Energy was the most active target industry in the U.S. by dollar value in August ($36.34 billion), followed by Healthcare ($24.02 billion). Computers & Electronics remained the most active target industry in the U.S. by number of deals in August (253) and over the last 12 months (2,648). Oil & Gas retained its position as the most active target industry in the U.S., as measured by dollar value, over the last 12 months, with $193.88 billion in volume. Figures 2 and 5.

U.S. Public Mergers

As for U.S. public merger terms in August 2017, average target break fees matched its 12-month average of 3.5%, while average reverse break fees increased to 7.2%, above the 12-month average of 5.6%. Figures 6 and 7. The use of cash consideration in August 2017 was at 53.3%, slightly below its 12-month average of 58.8%. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers was 20.0%, which is consistent with the 12-month average. Figure 11. Finally, there were no hostile offers reported  in August 2017, compared to the 12-month average of 9.1%. Figure 12.

All Figures referenced above are available here.

This post comes to us from Paul, Weiss, Rifkind, Wharton & Garrison LLP. It is based on the firm’s recent memorandum, “M&A at a Glance, September 2017” available here.

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