Paul Weiss Offers M&A at a Glance for February 2020

M&A activity globally and in the U.S. was mixed in February. Overall, the number of deals continued to decline in both the U.S. and the rest of the world, while total deal value[1] showed signs of recovery relative to the low levels recorded in January. Globally, the number of deals decreased by 14.5%, to 2,344, while the total deal value  increased by 44.6%, to $255.23 billion. U.S. M&A activity was also mixed, with the number of deals decreasing by 17.3%, to 688, while total deal value increased by 28.7%, to $100.53 billion. Average deal value increased overall—rising by 55.6% in the U.S., to $146.1 million, and by 69.1% globally, to $108.9 million. Figure 1. Even the mixed dealmaking activity in February may be a waning trend, as the continued COVID-19 outbreak continues to impact the global economy and financial markets, resulting in an increasingly uncertain outlook for M&A in 2020. For our client memoranda on navigating this crisis, visit our Coronavirus (COVID-19) Resource Center.

Strategic vs. Sponsor Activity

Strategic and sponsor activity was also mixed in February. The number of strategic deals decreased by 17.0% to 539 in the U.S. and by 16.5% to 1,995 globally. Meanwhile, strategic deal volume as measured by dollar value increased by 11.2% to $62.81 billion in the U.S. and by 23.6% to $161.56 billion globally. The number of sponsor-related deals decreased by 18.6% to 149 in the U.S., but remained relatively flat globally with a slight 0.3% decrease to 349 globally. Sponsor-related volume by dollar value increased by 74.4% to $37.72 billion in the U.S. and by 104.7% to $93.67 billion globally. Figure 1 and Annex Figures 1A4A.

Crossborder Activity

Global crossborder volume fell across multiple measures in February 2020, and the number of crossborder deals fell to 12-month lows, decreasing in dollar value by 3.3% to $48.99 billion, and in terms of number of deals by 11.2% to 541. U.S. inbound activity as measured by dollar value decreased by 73.3% to $4.95 billion, and the number of U.S. inbound crossborder deals decreased in February by 28.9% to 86. U.S. outbound activity as measured by dollar value decreased by 50.8% to $5.97 billion and the number of U.S. outbound crossborder deals decreased by 13.5% to 96. Figure 1 and Annex Figures 5A7A.

Japan was the leading country for U.S. inbound activity in February by total dollar value ($1.20 billion), and Canada was the leading country for U.S. inbound activity by total dollar value over the last 12-month period ($48.79 billion). Canada retained its lead for U.S. inbound activity by number of deals in February (22) and over the last 12-month period (318).

Australia was the leading country of destination for U.S. outbound activity in February by total dollar value ($1.86 billion), whereas the U.K. was the leading country for U.S. outbound activity by total dollar value over the last 12-month period ($28.36 billion). The U.K. was the leading country of destination for U.S. outbound activity by number of deals in February (18), and retained its lead as the leading country of destination for U.S. outbound activity by number of deals over the last 12 months (249). Figure 3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in February and over the last 12 months by number of deals (259 and 3,416, respectively) as well as the most active target industry by dollar value in February and over the last 12 months ($31.67 billion and $416.44 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in February 2020, average reverse break fees were below their 12-month levels (at 4.5% compared to 5.5%), while February average target break fees were below their 12-month average (at 3.2 % compared to 3.6%). 25.0% of deals contained a go-shop provision in February 2020, while 12.5% of deals contained a go-shop provision over the last 12 months. Figures 6, 7 and 8. Cash transactions comprised 62.5% of U.S. public mergers, above the 53.9% 12-month average. Figure 9. Notably, there were no tender offers for U.S. public mergers in February, compared with the 12-month average of 17.1% of deals.  Figure 11. Hostile or unsolicited transactions comprised 11.1% of U.S. public mergers in February 2020, lower than the 12-month average of 12.0% 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, March 2020,” available here.