M&A activity in the U.S. and globally in June was mixed. While the number of deals decreased by 23.7% in the U.S., to 655 deals, and by 13.2% globally, to 2,487 deals, the total value of deals[1] increased significantly, by 122.3% in the U.S., to $313.89 billion, and by 63.2% globally, to $478.29 billion. The average value of deals increased in the U.S. by 191.2%, to $479.22 million, and globally by 10.2%, to $192.32 million. Figure 1.

Strategic vs. Sponsor Activity

The levels of strategic versus financial buyer activity were also mixed. The number of strategic deals decreased in the U.S. by 20.1% to 526 and globally by 10% to 2,196. Figure 1 and Annex Figures 1A—4A. However, strategic deal volume as measured by dollar value increased significantly in the U.S. by 306.4% to $279.45 billion and globally by 128.1% to $400.34 billion. The number of sponsor-related deals decreased in June 2019 by 35.5% to 129 in the U.S. and by 31.7% to 291 globally, respectively. Sponsor-related volume by dollar value decreased by 52.4% to $34.44 billion in the U.S. and by 33.7% to $77.95 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Crossborder deal volume by dollar value increased slightly by 2.1% to $72.58 billion, while the number of crossborder deals decreased globally by 12.2% to 568. The number of U.S. inbound crossborder deals decreased in June by 14.8% to 92, while the number of U.S. outbound crossborder deals increased by 13.2% to 120. U.S. inbound activity as measured by dollar value increased significantly by 82.1% to $21.77 billion, while U.S. outbound activity as measured by dollar value decreased by 29.2% to $6.75 billion. Figure 1 and Annex Figures 5A—7A.

Germany was the leading country for U.S. inbound activity in June by total dollar value, while Canada was the leading country for U.S. inbound activity over the last 12-month period ($10.06 billion and $71.96 billion, respectively). Japan was the leading country for U.S. inbound activity in June by number of deals, while Canada was the leading country for U.S. inbound activity over the last 12-month period (20 and 328, respectively). 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 ($35.27 billion) and the leading country of destination for U.S. outbound activity in June and over the last 12 months by number of deals (20 and 270, respectively). Canada was the leading country for U.S. outbound activity in June by total dollar value ($2.98 billion). Figure_3.

Notably, Chinese outbound activity has decreased by 21.9% so far in 2019 compared to the same period last year. As reported in the financial press, this decrease is due to a number of regulatory and political considerations both in China and the U.S. that have had the effect of tightening outbound merger activity by Chinese companies.

U.S. Deals by Industry

Computers and Electronics remained the most active target industry in June and over the last 12 months by number of deals (248 and 2,498, respectively). Computers and Electronics was also the most active target industry over the last 12 months by activity as measured by dollar value, whereas Healthcare rose as the most active target industry in June by activity as measured by dollar value ($417.36 billion and $102.49 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in June 2019, both average target break fees and average reverse break fees were above their 12-month levels (at 4.0% compared to 3.6% and 6.5% compared to 5.7%, respectively). No deals contained a go-shop provision. Figures 6, 7 and 8. Cash transactions comprised 55.0% of U.S. public mergers, in line with the 52.0% 12-month average. Figure 9. There were no hostile or unsolicited deals in June, compared to the 12-month average of 13.9%. 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 — July 2019,” dated July 15, 2019, and available here.