Paul Weiss Offers M&A at a Glance for March 2018

M&A activity gained momentum in March 2018, capping the strongest opening quarter in the history of this publication. In the U.S., deal volume returned to January levels, increasing by 109.6% to $174.10 billion, and the number of deals increased by 2.9% to 751. Globally, deal volume increased by 49.9% to $446.00 billion, and the number of deals increased by 4.0% to 2,838. As described below, the one notable exception to the overall trend was a decrease in sponsor-related deal volume.

Strategic vs. Sponsor Activity

The increases in deal volume were reflective of a strong month for strategic transactions. In the U.S., strategic deal volume by dollar value increased by 100.40% to $154.61 billion while the number of deals decreased by 0.7% to 566. Globally, strategic deal volume increased by 74.3% to $388.66 billion with the number of deals increasing by 3.0% to 2,468. Figure 1 and Annex Figures 1A—4A. As for sponsor-related activity, U.S. deal volume decreased by 32.4% to $19.48 billion while the number of deals increased by 15.6% to 185. Global sponsor-related deal volume decreased by 23.2% to $57.33 billion while the number of deals increased by 10.8% to 370. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity1

U.S. inbound deal volume increased by 154.9% to $30.20 billion while the number of U.S. inbound deals remained flat at 117. U.S. outbound deal volume decreased by 34.6% to $36.11 billion, and the number of U.S. outbound deals decreased by 1.6% to 120. Figure 1 and Annex Figures 5A—7A. Globally, crossborder deal volume increased by 46.9% to $142.14 billion and the number of crossborder deals decreased by 4.9% to 654.

In U.S. inbound activity for the month of March, France was the leading country of origin by dollar value ($15.29 billion), and Canada remained the leading country of origin by number of deals (37). Canada also remained the leader for U.S. inbound activity over the last 12-month period, both by dollar value ($67.16 billion) and number of deals (401). The U.K. was the leader in U.S. outbound deal volume in March ($14.99 billion) and retained its lead over the last 12-month period ($87.53 billion). The U.K. was also the leader in the number of U.S. outbound deals in March (28), and Canada took over the 12-month lead from the U.K. (252). Figure 3.

U.S. Deals by Industry

Driven in large part due to Cigna Corp.’s announced acquisition of Express Scripts Holding Co. for $53.92 billion, healthcare was the most active target industry by dollar value both in March 2018 ($76.88 billion) and over the last 12-month period ($339.50 billion). Computer & Electronics remained the most active target industry by number of deals in March (239) and over the last 12-month period (2,846). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in March 2018, average target break fees (3.4%) were near their 12-month averages (3.6%). Average reverse break fees (4.6%) matched the 12-month low, a full percentage point below the average over the last 12-month period (5.6%). Figures 6 and 7. For the second month in a row, no public mergers in March 2018 included a go-shop provision. Figure 8. The use of cash consideration in March 2018 decreased to 42.9%, below the average of 57.9% over the last 12-month period. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers was 14.3%, below its average of 18.0% over the last 12-month period. Figure 11. Finally, the incidence of hostile offers in March 2018 was 22.2%, above the average of 11.1% over the last 12-month period. Figure 12.

ENDNOTE

1 Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer (“Outbound”) or the target (“Inbound”) has a U.S. nationality.

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 memorandum, “M&A at a Glance — April 2018,” available here.