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

M&A activity in May 2018 generally weakened from the prior month. The total number of deals decreased in the U.S. by 1.2% to 667 (the second-lowest level in the last 12-month period) and globally by 4.8% to 2,759 (the lowest level in the last 12-month period). May deal volume by dollar value decreased in the U.S. by 29.9% to $144.39 billion and globally by 21.9% to $401.76 billion.[1]

Strategic vs. Sponsor Activity

The number of strategic deals increased by 2.4% to 564 in the U.S., but decreased by 5.0% to 2,456 globally, the second-lowest level in the last 12-month period. U.S. and global strategic volume by dollar value decreased by 42.0% to $101.28 billion and by 27.5% to $310.25 billion, respectively. Figure 1 and Annex Figures 1A—4A. The number of sponsor-related deals decreased by 15.7% to 113 in the U.S. and by 2.9% to 303 globally, each the lowest level in the last 12-month period. Sponsor-related volume, however, was a bright spot, increasing by 36.9% to $43.11 billion in the U.S. and 5.4% to $91.50 billion globally, the second-highest level in the previous 12-months. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

The number of deals decreased in May for both U.S. inbound transactions (by 3.7% to a 12-month low of 103) and outbound transactions (by 19.1% to 110). U.S. inbound volume by dollar value increased by 70.6% to $29.52 billion whereas U.S. outbound volume by dollar value decreased by 40.6% to $31.15 billion. Figure 1 and Annex Figures 5A—7A. Globally, the number of crossborder deals decreased by 9.9% to 637, the lowest level in the last 12-month period. Global crossborder deal volume decreased by 12.9% to $178.64 billion, but was still the second-highest level in the last 12-month period.

Canada remained the leader for U.S. inbound activity by number of deals in both the month of May (26) and over the last 12-month period (390). Canada also was the leading country for U.S. inbound activity as measured by deal volume in May ($15.91 billion) and over the last 12-month period ($78.96 billion). The U.K. was the leading destination country by both deal number in May (29) and over the last 12-month period (282). India was the leading destination country for U.S. outbound activity by dollar value ($16.04 billion), driven primarily by Walmart Inc.’s announced $16.00 billion investment of a 77% interest in Flipkart Ltd, while the U.K. remained the leader over the last 12-month period ($116.70 billion). Figure 3.

U.S. Deals by Industry

Computer & Electronics remained the most active target industry by number of deals in May (216) and over the last 12-month period (2,759). Computer & Electronics was also the most active target industry by dollar value in May 2018 ($30.15 billion), while healthcare remained the most active target industry over the last 12-month period ($299.67 billion). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in May 2018, average target break fees (3.4%) decreased below the 12-month average (3.6%). Average reverse break fees (6.6%) rose above the 12-month average (5.7%), with average reverse break fees in financial buyer transactions increasing to 8.2%. Figures 6 and 7. No transactions in May 2018 included a go-shop provision. Figure 8. The use of cash consideration in May 2018 increased to 54.4%, still below the average of 57.5% over the last 12-month period. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers (27.3%) was above the 12-month average (17.9%). Figure 11. The incidence of hostile/unsolicited offers in May 2018 was 22.2%, above the average of 12.9% over the last 12-month period. Figure 12.

ENDNOTE

[1]  Each metric in this publication that references 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 — June 2018,” available here.

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