M&A activity in the U.S. and worldwide declined against many indicators in September, confirming numerous recent reports that dealmaking has taken a downturn. While the number of deals rose by 13.9% in the U.S., to 803, and by 7.6% globally, to 2,806, their total value[1] fell by 41.0% in the U.S., to $71.49 billion, and by 28.0% globally, to $187.97 billion. Average deal value also decreased by 48.2% in the U.S., to $89.0 million, and by 33.1% globally, to $67.0 million. Figure 1.

Strategic vs. Sponsor Activity

Similarly, while the number of strategic deals increased in the U.S. by 19.7% to 662 and globally by 8.7% to 2,472, strategic deal volume as measured by dollar value decreased in the U.S. by 28.1% to $52.38 billion, and globally by 11.2% to $152.58 billion. The number of sponsor-related deals also decreased by 7.2% to 141 in the U.S. and by 0.3% to 334 globally, respectively. Finally, sponsor-related volume by dollar value decreased by 60.4% to $19.12 billion in the U.S. and by 60.3% to $35.39 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Crossborder activity also showed mixed results. Crossborder deal volume by dollar value decreased by 22.3% to $61.48 billion whereas the number of crossborder deals increased globally by a modest 4.5% to 601. U.S. inbound activity as measured by dollar value increased significantly by 72.5% to $22.02 billion, driven in part by the announced $5.8 billion acquisition by a consortium led by Mirae Asset Global Investments’ of Anbang Insurance Group Co Ltd’s luxury hotel portfolio (comprising 15 high-end hotels in U.S. cities). The number of U.S. inbound crossborder deals also increased in September by 6.3% to 102. U.S. outbound activity as measured by dollar value decreased significantly by 72.4% to $5.27 billion whereas the number of U.S. outbound crossborder deals increased by 4.4% to 119. Figure 1 and Annex Figures 5A—7A.

South Korea was the leading country for U.S. inbound activity in September by total dollar value for the first time since December 2016 ($8.27 billion), driven largely by the announced $5.8 billion Mirae acquisition discussed above; while Japan was the leading country for U.S. inbound activity in September by number of deals. Canada was the leading country for U.S. inbound activity by deal value and number of deals over the last 12-month period (at $60.36 billion and 326 deals, respectively). For the first time since the inception of this publication in April 2012, Chile was the leading country of destination for U.S. outbound activity in September by total dollar value ($2.17 billion), driven by the announced acquisition of a 20% stake in LATAM Airlines Group SA, by Delta Air Lines, Inc. Canada was again the leading country of destination for U.S. outbound activity over the last 12 months as measured by dollar value ($29.90 billion). Canada was also the leading country of destination for U.S. outbound activity in September by number of deals (23), while the U.K. was the leading country of destination over the last 12 months by number of deals (273). Figure 3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in September and over the last 12 months by both number of deals (294 and 2,901, respectively) and by dollar value ($12.63 billion and $452.29 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in September 2019, average target break fees were slightly above their 12-month levels (at 3.8% compared to 3.6%). Average reverse break fees in contrast were below their 12-month levels (at 4.7 % compared to 5.6%). No deals contained a go-shop provision. Figures 6, 7 and 8. Cash transactions comprised 50% of U.S. public mergers, below the 51.3% 12-month average. Figure 9. There were no hostile or unsolicited transactions in September 2019, compared to the 12-month average of 12.8% of deals. 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, October 2019,” available here.