Paul Weiss Offers M&A at a Glance for August 2019

M&A activity in the U.S. and worldwide weakened in August across almost all indicators. The number of deals fell by 9.5% in the U.S., to 641, and by 21.9% globally, to 2,394. The total value of deals[1] fell by 14.3% in the U.S., to $119.86 billion, and by 21.9% globally, to $259.78 billion. Finally, average deal value decreased by 5.4% in the U.S., to $187.0 million, but stayed flat globally, at $108.5 million. Figure 1.

Strategic vs. Sponsor Activity

Both strategic and sponsor activity generally declined. The number of strategic deals decreased in the U.S. by 7.8% to 505 and globally by 20.5% to 2,094. Figure 1 and Annex Figures 1A4A. Strategic deal volume as measured by dollar value decreased in the U.S. by 5.1% to $77.22 billion, and globally by 18.9% to $178.24 billion. The number of sponsor-related deals decreased in August 2019 by 15.0% to 136 in the U.S. and by 30.6% to 300 globally, respectively. Sponsor-related volume by dollar value decreased by 27.2% to $42.63 billion in the U.S. and by 27.8% to $81.54 billion globally. Figure 1 and Annex Figures 1A4A.

Crossborder Activity

Crossborder deal volume by dollar value decreased by 38.5% to $81.17 billion and the number of crossborder deals decreased globally by 24.0% to 566. The number of U.S. inbound crossborder deals increased in August by 11.1% to 100, while the number of U.S. outbound crossborder deals decreased by 18.6% to 118. U.S. inbound activity as measured by dollar value decreased significantly by 71.7% to $12.95 billion, but U.S. outbound activity as measured by dollar value increased by 30.9% to $19.35 billion. Figure 1 and Annex Figures 5A7A.

Notwithstanding deepening Sino-U.S. tensions on the political stage, China was the leading country for U.S. inbound activity in August by total dollar value, the first time since November 2017, while Canada was the leading country for U.S. inbound activity over the last 12-month period ($3.71 billion and $60.12 billion, respectively). Canada was the leading country for U.S. inbound activity in August and over the last 12-month period by number of deals (27 and 337, respectively). Germany was the leading country of destination for U.S. outbound activity in August by total dollar value ($7.63 billion), driven by Elanco Animal Health Inc’s $7.60 billion acquisition of Bayer Animal Health GmbH. The U.K. remained the leading country of destination for U.S. outbound activity over the last 12 months by activity as measured by dollar value ($30.28 billion). Canada and the U.K. tied as the leading countries of destination for U.S. outbound activity in August by number of deals (20) and the U.K. was the leading country of destination over the last 12 months by number of deals (282). Figure_3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in August and over the last 12 months by all measures, including by number of deals (229 and 2,709, respectively) and by dollar value ($27.89 billion and $454.70 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in August 2019, average target break fees were close to their 12-month levels (at 3.5% compared to 3.6%), and average reverse break fees were slightly above their 12-month levels (at 6.0 % compared to 5.7%). Five deals contained a go-shop provision, the largest number in the past year, representing 27.8% of public mergers, significantly above the 12-month average of 11.8%. Figures 6, 7 and 8. Cash transactions comprised 44.4% of U.S. public mergers, below the 50.9% 12-month average. Figure 9. Hostile and unsolicited transactions represented 14.3% of announced U.S. public mergers in August 2019, compared to the 12-month average of 14.0%. 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 includes 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 2019,” available here.

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