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

M&A activity in June 2018 weakened from last month across most measures, although still generally strong for the first half of the year.  The total number of deals decreased in the U.S. by 28.6% to 528 (the lowest level since the beginning of this publication in 2012) and globally by 17.5% to 2,457 (the lowest level since March 2014).  However, while June deal volume by dollar value also decreased globally by 14.0% to $348.56 billion, deal volume increased in the U.S. by 27.6% to $184.30 billion.[1]

Strategic vs. Sponsor Activity

The number of strategic deals decreased by 33.0% to 410 in the U.S. and by 18.6% to 2,162 globally, each the lowest respective level in the last 12-month period.  However, while global strategic volume by dollar value also decreased by 17.1% to $256.99 billion,  U.S. strategic volume by dollar value increased by 41.7% to $142.69 billion.  Figure 1 and Annex Figures 1A—4A.  The number of sponsor-related deals decreased by 7.1% to 118 in the U.S. and by 8.1% to 295 globally, each the lowest respective level in the last 12-month period.  Sponsor-related volume decreased by 4.8% to $41.61 billion in the U.S. and by 4.0% to $91.57 billion globally.  Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

The number of deals decreased in June 2018 for both U.S. inbound transactions (by 29.7% to a 12-month low of 78) and outbound transactions (by 6.4% to 117).  U.S. inbound volume by dollar value decreased by 74.2% to a 12-month low of $7.40 billion and U.S. outbound volume by dollar value decreased by 63.6% to $11.49 billion.  Figure 1 and Annex Figures 5A—7A.  Globally, the number of crossborder deals decreased by 13.8% to 604, the lowest level in the last 12-month period.  Global crossborder deal volume by dollar value decreased by 60.7% to $68.77 billion.

Canada remained the leader for U.S. inbound activity by number of deals in both the month of June (14) and over the last 12-month period (363).  Switzerland was the leading country for U.S. inbound activity as measured by deal volume by dollar value in June ($2.43 billion), while Canada retained its lead over the last 12-month period ($77.05 billion).  The U.K. was the leading destination country by deal number in June (32) and over the last 12-month period (297).  Sweden was the leading destination country for U.S. outbound activity by dollar value ($2.36 billion), while the U.K. remained the leader over the last 12-month period ($116.69 billion). Figure 3.

U.S. Deals by Industry

Computer & Electronics remained the most active target industry by number of deals in June (183) and over the last 12-month period (2,771).  Telecommunications was the most active target industry by dollar value in June ($82.14 billion), while healthcare remained the most active target industry over the last 12-month period ($307.81 billion). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in June 2018, average target break fees (4.0%) increased above the 12-month average (3.6%) and average reverse break fees (6.0%) were near the 12-month average (5.9%).  Figures 6 and 7.  One transaction in June involving a financial buyer included a go-shop provision Figure 8. The use of cash consideration in June decreased to 50.0%, below the 12-month average of 55.9% Figure 9. Notably, there were no tender offers for U.S. public mergers or hostile/unsolicited offers in June, compared with 12-month averages of 16.2% and 13.0%, respectively. Figure 11 and Figure 12.

ENDNOTES

[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 — July 2018,” available here.