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

M&A activity in April 2018, as measured by number of deals, dipped from March 2018 levels in the U.S. and globally across every metric.  The total number of deals decreased by 15.2% to 669 in the U.S. and 9.7% to 2,771 globally, each the second-lowest respective level in the last 12-month period.  April volume by dollar value increased both in the U.S. and globally.[1]  In the U.S., deal volume increased by 17.6% to $206.28 billion.  Globally, deal volume increased by 8.3% to $525.68 billion, a 12-month high.

Strategic vs. Sponsor Activity

The number of strategic deals decreased by 10.8% to 535 in the U.S. and by 8.6% to 2,459 globally, each the second-lowest respective level in the last 12-month period.  U.S. strategic volume by dollar value increased by 10.3% to $170.67 billion, while global strategic deal volume decreased by 0.9% to $422.05 billion.  Figure 1 and Annex Figures 1A—4A.  As for sponsor-related activity, the number of deals decreased by 29.1% to 134 in the U.S. (the second-lowest level in the last 12-month period) and by 17.2% to a 12-month low of 312 globally.  U.S. sponsor-related volume increased by 71.8% to $35.61 billion while global sponsor-related volume increased by 73.8% to a 12-month high of $103.63 billion.  Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

The number of deals decreased in the month of April for both U.S. inbound transactions (by 14.5% to a 12-month low of 106) and outbound transactions (by 6.7% to 126).  U.S. inbound volume decreased by 42.4% to $17.40 billion and U.S. outbound volume increased by 72.5% to $51.78 billion.  Figure 1 and Annex Figures 5A—7A.  Globally, the number of crossborder deals decreased by 4.8% to 674 (tied for the second lowest level in the last 12-month period), while crossborder volume increased by 21.2% to $207.15 billion, a 12-month high.

Canada remained the leader for U.S. inbound activity by number of deals in both the month of April (24) and over the last 12-month period (394).  Switzerland was the leading country of origin for U.S. inbound activity by dollar value ($9.21 billion) and Canada remained the leader over the last 12-month period ($67.06 billion).  The U.K. swept the U.S. outbound deal categories by coming in first in deal number (30) in April as well as during the last 12-month period (270), and led in volume in April ($39.73 billion) and during the last 12-month period ($115.55 billion).  Figure 3.

U.S. Deals by Industry

Computer & Electronics remained the most active target industry by number of deals in April (177) and over the last 12-month period (2,827).  Telecommunications was the most active target industry by dollar value in April 2018 ($61.18 billion), driven in large part by T-Mobile US, Inc.’s announced acquisition of Sprint Corp. for $26.51 billion.  Healthcare was the most active target industry over the last 12-month period ($315.27 billion).  Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in April 2018, average target break fees (4.0%) increased over the 12-month average (3.6%).  Average reverse break fees (5.7%) matched the 12-month average (5.7%).  Figures 6 and 7.  The use of go-shop provisions in U.S. public mergers reappeared for the first time since February 2018, with two transactions including a go-shop provision, or 11.1% of U.S. public mergers.  Figure 8.  The use of cash consideration in April 2018 increased to 44.4%, still below the average of 56.5% over the last 12-month period.  Figure 9.  All transactions involving a stock component included a fixed exchange ratio.  Figure 10.  The incidence of tender offers as a percentage of U.S. public mergers was 5.6%, significantly below its average of 17.2% over the last 12-month period.  Figure 11.  Finally, the incidence of hostile offers in April 2018 was 10.0%, slightly below the average of 11.8% over the last 12-month period.  Figure 12.

ENDNOTE

[1]   Deal volume by dollar value is calculated from the subset of the total number of deals that include a disclosed deal value.

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 — May 2018,” available here.