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

M&A activity in September 2018 was mixed compared to August levels, but generally reflected an overall continuing downward trend starting in April of this year.  Deal volume by dollar value0F[1] decreased in the U.S. by 44.5% to $77.06 billion and globally by 16.1% to $238.25 billion.  While the number of deals increased in the U.S. by 2.0% to 357 (the second lowest level since the beginning of this publication in 2012), the number of deals decreased globally by 1.5% to 2,195.

Strategic vs. Sponsor Activity

The number of strategic deals increased in September 2018 by 4.8% to 262 in the U.S. and decreased by 1.2% to 1,951 globally.  Strategic volume by dollar value decreased in the U.S. by 61.8% to $43.69 billion and globally by 27.3% to $161.73 billion.  Figure 1 and Annex Figures 1A—4A.  The number of sponsor-related deals decreased in the U.S. by 5.0% to 95 and globally by 3.6% to 244.  A relative bright spot is sponsor-related deal volume as measured by dollar value, which increased in the U.S. by 36.5% to $33.38 billion and globally by 24.7% to $76.52 billion, although on a relatively flat trajectory for the year overall.  Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Globally, the number of crossborder deals increased by 7.1% to 510, although, again, this figure represents the second lowest level for the last 12-month period.  Global crossborder deal volume by dollar value increased by 50.8% to $92.32 billion.

In the U.S., the number of crossborder deals also increased in September 2018.  U.S. inbound transactions increased by 3.1% to 66, and U.S. outbound transactions increased by 21.3% to 91, but we note that both figures represented the second lowest levels for such activity in the last 12-month period.  U.S. crossborder activity as measured by dollar value was more mixed, with inbound volume by dollar value decreasing by 6.2% to $16.96 billion and U.S. outbound volume by dollar value increasing by 40.5% to $22.25 billion.  Figure 1 and Annex Figures 5A—7A.

Canada led U.S. inbound activity by number of deals in the month of September (16) and continued as leader over the last 12-month period (320).  Japan was the leading country for U.S. inbound activity as measured by total dollar value in September ($7.77 billion), with Canada retaining its lead over the last 12-month period ($83.16 billion).  The U.K. was again the leading destination country for U.S. outbound transactions by number of deals in September (21) and over the last 12-month period (279).  The U.K. was also the leading destination country for U.S. outbound activity by dollar value in September ($7.16 billion) and over the last 12-month period ($85.75 billion).  Figure 3.

U.S. Deals by Industry

Computers & Electronics remained the most active target industry by number of deals in September (95) and over the last 12-month period (2,384).  Computers & Electronics was also the most active target industry by dollar value in September ($17.91 billion), while Healthcare remained the most active target industry over the last 12-month period ($292.27 billion).  Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in September 2018, both average target break fees and average reverse break fees were below their 12-month averages, at 3.3% (compared to a 12-month average of 3.7%) and 4.9% (compared to a 12-month average of 5.6%), respectively.  Figures 6 and 7.  No transactions in September included a go-shop provision.  Figure 8.  The use of cash consideration in September increased to 57.1%, above the 12-month average of 53.4%.  Figure 9.  Tender offers for U.S. public mergers in September (14.3%) exceeded the 12-month average (13.5%) and hostile/unsolicited offers in September (15.4%) also exceeded the 12-month average (14.9%).  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 — October 2018,” available here.

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