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

M&A activity in August, like July, continued the recent downward trend in number of deals across most sectors while showing more mixed results as measured by total dollar value.[1]  The number of deals decreased in the U.S. by 39.4% to 274 and globally by 19.2% to 2,027 (the third consecutive month with the lowest levels since the beginning of this publication in 2012).  However, deal volume by dollar value increased in the U.S. by 10.1% to $136.47 billion while it decreased globally by 6.6% to $275.93 billion.

Strategic vs. Sponsor Activity

The number of strategic deals decreased by 43.2% to 191 in the U.S. and by 17.8% to 1,806 globally.  However, strategic volume by dollar value increased in the U.S. by 27.4% to $112.27 billion and globally by a more modest 2.7% to $225.73 billion.  Figure 1 and Annex Figures 1A—4A.  The number of sponsor-related deals decreased by 28.4% to 83 in the U.S. and by 29.4% to 221 globally.  Sponsor-related volume decreased in the U.S. (by 32.4% to $24.19 billion) and globally (by 33.7% to $50.20 billion).  Figure 1 and Annex Figures 1A—4A.  M&A activity as measured by number of deals were the lowest monthly figures since the beginning of this publication for all sectors.

Crossborder Activity

The number of crossborder deals decreased in August 2018 for U.S. inbound transactions (by 48.5% to 50) and for U.S. outbound transactions (by 37.0% to 68).  U.S. inbound volume by dollar value decreased by 62.8% to $16.86 billion.  In contrast, U.S. outbound volume by dollar value increased by 28.2% to $15.46 billion.  Figure 1 and Annex Figures 5A—7A.  Globally, the number of crossborder deals decreased by 34.0% to 423, the lowest level since the beginning of this publication.  Global crossborder deal volume by dollar value decreased by 48.6% to $59.13 billion.

Japan led U.S. inbound activity by number of deals in the month of August (11), while Canada continued as leader over the last 12-month period (331).  Australia was the leading country for U.S. inbound activity as measured by total dollar value in August ($7.24 billion) and Canada retained its lead over the last 12-month period ($82.13 billion).  The U.K. was again the leading destination country by number of deals in August (20) and over the last 12-month period (286).  The U.K. was also the leading destination country for U.S. outbound activity by dollar value in August ($5.94 billion) and over the last 12-month period ($118.33 billion).  Figure 3.

U.S. Deals by Industry

Computers & Electronics remained the most active target industry by number of deals in August (71) and over the last 12-month period (2,529).  Oil & Gas was the most active target industry by dollar value in August ($81.29 billion), while Healthcare remained the most active target industry over the last 12-month period ($294.93 billion).  Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in August 2018, average target break fees (3.4%) were below the 12-month average (3.7%), and average reverse break fees (4.8%) were also below the 12-month average (5.6%).  Figures 6 and 7.  No transaction in August involving a financial buyer included a go-shop provision.  Figure 8.  The use of cash consideration in August decreased to 50.0%, below the 12-month average of 54.9%.  Figure 9.  Tender offers for U.S. public mergers in August (16.7%) exceeded the 12-month average (14.2%), while hostile/unsolicited offers in August (7.7%) were below the 12-month average (14.6%).  Figures 11 and 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 — September 2018,” available here.

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