M&A activity in February 2019 generally slowed in the U.S. and globally. Deal volume by dollar value[1] decreased by 25.6% to $152.24 billion in the U.S., and by 30.3% to $248.57 billion globally. Further, the number of deals decreased by 47.0% to 367 in the U.S. and by 28.0% to 1,858 globally, representing the lowest monthly values recorded in the history of this publication. The average value of announced public mergers increased by 40.3% to $414.82 million in the U.S., but decreased by 3.2% to $133.78 million globally.  Figure 4.

Strategic vs. Sponsor Activity

Strategic deal volume as measured by dollar value decreased in the U.S. by 17.7% to $117.43 billion and globally by 25.5% to $192.36 billion. The number of strategic deals also decreased in the U.S. by 49.1% to 292 and globally by 29.1% to 1,628. Figure 1 and Annex Figures 1A—4A. The number of sponsor-related deals decreased in February 2019 by 36.4% to 75 in the U.S. and by 18.4% to 230 globally. Additionally, sponsor-related volume by dollar value decreased by 43.9% to $34.81 billion in the U.S. and by 42.8% to $56.21 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

The number of crossborder deals decreased globally by 25.6% to 437, and crossborder deal volume by dollar value decreased slightly by 5.1% to $69.55 billion.

In the U.S., the number of U.S. inbound crossborder deals decreased in February 2019 by 32.6% to 62 and U.S. outbound transactions decreased by 21.9% to 89, both reaching 12-month lows. U.S. inbound activity as measured by dollar value increased by 366.0% to $43.80 billion, but U.S. outbound volume by dollar value decreased by 81.1% to $3.69 billion. Figure 1 and Annex Figures 5A—7A.

Japan was the leading country for U.S. inbound activity by number of deals (12) in the month of February, and Canada retained its lead for U.S. inbound activity by number of deals (312) over the last 12-month period. Canada was the leading country for U.S. inbound activity as measured by total dollar value in February ($20.36 billion), and continues to lead over the last 12-month period as well ($91.67 billion). In both February and over the last 12-month period, the U.K. was again the leading destination country for U.S. outbound transactions by number of deals (20 and 308, respectively), seemingly defying concerns over Brexit. Canada was the leading destination country for U.S. outbound activity by dollar value in February ($1.36 billion). The U.K. retained its lead for U.S. outbound activity by dollar value over the last 12-month period ($35.21 billion). Figure 3.

U.S. Deals by Industry

Computers & Electronics remained the most active target industry by number of deals in February (160) and over the last 12 months (2,154). Healthcare was the most active target industry by dollar value in February ($34.09 billion), driven by Danaher Corporation’s $21.40 billion acquisition of General Electric’s Biopharma business. Computers & Electronics was the most active target industry by dollar value over the last 12 months ($363.44 billion). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in February 2019, average target break fees are in line with the range of 12-month levels, but average reverse break fees were above their 12-month levels at 6.7% compared to 5.7%.  Figures 6, 7 and 8. Cash comprised the consideration in 71.4% of U.S. public mergers, well above the 49.4% 12-month average, and there were no mixed consideration or choice-election transactions. Figure 9. Last month also saw a significant increase in the level of announced two-step transactions at 42.9%, compared to the 12-month average of 12%. Further, hostile and unsolicited transactions represented 36.4% of announced U.S. public mergers, more than double the 14.7% 12-month average. Figure 12.

All Figures referenced above are available here.

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.

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–February 2019,” dated March 14, 2019, and available here.