Paul Weiss Offers M&A at a Glance for December

While 2016 was strong overall (see our annual review here), M&A activity in the last month was mixed.  Total deal volume in December 2016 rose globally by 31.2% to $376.14 billion but declined in the U.S. by 49.4% to $78.58 billion.  The number of deals reached 12-month lows both globally and in the U.S., with decreases of 24.2% to 2,505 and 28.8% to 591, respectively, with a more pronounced drop in the number of sponsor-related deals.  Global strategic deal volume increased by 38.8% to $296.59 billion, while deal volume in the U.S. decreased by 58.5% to $48.54 billion.  The number of deals decreased both globally and in the U.S. (by 23.6% to 2,275 and by 24.8% to 515, respectively).  Global sponsor-related deal volume increased by 8.8% to $79.54 billion and U.S. sponsor-related deal volume decreased by 21.4% to $30.04 billion.  The number of sponsor-related deals decreased both globally and in the U.S. (by 29.4% to 230 and by 47.6% to 76, respectively).  Figure 1 and Annex Figures 1A-4A.

Crossborder deal volume in December showed similarly mixed results.  Global crossborder activity as measured by deal value increased by 153.8% to $196.77 billion.  Outbound U.S. activity rose by a staggering 1,396.3% to $80.20 billion, boosted by Praxair Inc.’s $35.16 billion offer to acquire Linde AG, while inbound U.S. activity decreased by 20.3% to $23.69 billion.  At the same time, the number of deals decreased across the board (by 24.7% to 671 globally, by 37.9% to 105 for outbound U.S. activity and by 39.6% to 96 for inbound U.S. activity).  Figure 1 and Annex Figures 5A-7A.  Germany claimed the lead for monthly outbound U.S. activity by volume in December 2016 ($42.82 billion), again boosted by the Praxair/Linde transaction and the U.K. reclaimed the top spot from the Netherlands as the 12-month leader ($69.64 billion).  As for U.S. inbound activity, Japan was the leading country of origin in deal volume ($6.56 billion) and in number of deals (18) in December 2016, while Canada maintained its 12-month lead ($116.19 billion and 399 deals).  Figures 3 and 5.

Computers & Electronics was the most active target industry by both deal volume and number of deals in the U.S. in December 2016 ($14.56 billion and 131 deals, respectively) and maintained its position as the most active target industry for the last 12 months, as measured by both volume ($296.75 billion) and number of deals (2,479).  Figure 2.

With respect to U.S. public mergers, average deal value dropped to a 12-month low of $1.18 billion.  Figure 6.  Target break fees remained near their 12-month average, while reverse break fees returned to normal levels after reaching a 12-month high in November 2016.  Figures 6 and 7.  The use of cash consideration in December 2016 (58.3%) remained close to its 12-month average (63%).  Figure 9.  The incidence of tender offers as a percentage of U.S. public mergers remained well below its 12-month average (8.3%, as compared to a 12-month average of 20.1%).  Figure 11.  Finally, the percentage of hostile offers as a percentage of U.S. public mergers (6.7%) also trailed its 12-month average (12.9%).  Figure 12.

The figures reference above are all available here.

Additionally, you can find a video summary of this post 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 (January 2016),” dated January 15, 2016, and available here.