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

In U.S. and global M&A activity for October 2017, deal volume increased by total dollar value, while the total number of deals decreased in some cases to or nearing 12-month lows. In the U.S., deal volume increased by 23.4% to $112.34 billion, while the number of deals decreased by 12.8% to 810. Globally, deal volume increased by 1.8% to $298.33 billion, and the number of deals decreased by 13.7% to 3,053.

Strategic vs. Sponsor Activity

In the U.S., strategic deal volume increased by 5.3% to $84.45 billion, and the number of deals decreased by 18.8% to 618. Globally, strategic deal volume increased by 3.2% to $236.74 billion, and the number of strategic deals decreased by 15.1% to 2,684. Trends in sponsor-related activity diverged in the U.S and globally. In the U.S., sponsor-related deal volume and number of deals increased by 156.4% to $27.89 billion and 14.3% to 192 (a 12-month high), respectively. Globally, sponsor-related deal volume decreased by 3.1% to $61.59 billion and the number of deals decreased by 2.6% to 369. Figure 1 and Annex Figures 1A-4A.

Crossborder Activity

Global crossborder activity in October 2017 followed similar trends to the overall market, while U.S. inbound and outbound activity fell in both deal volume and number. Globally, crossborder deal volume increased by 10.5% to $105.62 billion, and the number of deals decreased by 13.7% to 674, a 12-month low. In the U.S., inbound deal volume decreased by 21.8% to $12.40 billion, and the number of inbound deals decreased by 14.4% to 125. Outbound U.S. deal volume decreased by 44.4% to $8.43 billion, and the number of U.S. outbound deals decreased by 12.3% to 121. Figure 1 and Annex Figures 5A-7A.

In U.S. inbound activity, China was the leading country of origin for October 2017, with $3.25 billion in deal volume, propelled by Jining Ruyi Investment Co.’s $2.00 billion acquisition of Invista BV and Nanjing Xinjiekou Department Store’s $905 million acquisition of Dendreon Pharmaceuticals. Canada took the lead for U.S. inbound activity by dollar value over the last 12 months, with $43.70 billion in volume, and remained the leading country of origin by number of U.S. inbound deals in October (31) and over the last 12 months (414). As for U.S. outbound activity, Canada also led in October deal volume ($1.75 billion), driven by Schlumberger and Torxen’s proposed $1.00 billion acquisition of the Palliser Block of oil and gas assets from Cenovus Energy, and Germany retained its lead in outbound deal volume over the last 12 months ($55.88 billion). The U.K. was again the leader in the number of U.S. outbound deals in October (21) and over the last 12 months (300). Kosmos Energy and Trident Energy’s proposed acquisition of an interest in oil and gas assets, valued at $650 million, resulted in Equatorial Guinea joining the top five countries of destination for outbound U.S. crossborder transactions for the first time since the inception of this publication. Figure 3.

U.S. Deals by Industry

Computers & Electronics was the most active target industry by dollar value in October 2017 ($41.05 billion), driven by Emerson Electric’s proposed acquisition of Rockwell Automation, valued at $28.95 billion. Computers & Electronics also remained the most active target industry by number of deals in October (260) and over the last 12 months (2,830) and moved ahead of Oil & Gas to become the most active target industry by deal volume over the last 12 months, with $188.70 billion. Figures 2 and 5.

U.S. Public Mergers

As for U.S. public merger deal terms in October 2017, average target break fees returned to the 12-month average of 3.5%. While average reverse break fees increased to 4.7%, this level still remains below the 12-month average of 5.6%. Figures 6 and 7. The use of cash consideration in October 2017 decreased to 66.7%, above the 12-month average of 60.9%. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers was 8.3%, which is below the 12-month average of 20.1%. Figure 11. Finally, the incidence of hostile offers in October 2017 was at 14.3%, above the 12-month average of 10.0%. 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, November 2017” available here.

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