M&A activity in the U.S. and worldwide was mixed in October. The number of deals continued to fall with a decline of 11.2% in the U.S., to 744, and of 8.1% globally, to 2,708. At the same time, total deal value[1] rose by 37.5% in the U.S., to $99.29 billion, and by 47.2% globally, to $282.72 billion. Average deal value also increased by 54.8% in the U.S., to $133.5 million, and by 60.2% globally, to $104.4 million.  Figure 1.

Strategic vs. Sponsor Activity

The number of strategic deals decreased in the U.S. by 15.6% to 583 and globally by 9.6% to 2,349, but strategic deal volume as measured by dollar value increased in the U.S. by 23.8% to $65.39 billion and globally by 27.4% to $197.49 billion. As the one consistent bright spot this month,  sponsor-related deals showed gains across all metrics.  The number of sponsor-related deals increased by 9.5% to 161 in the U.S. and by 2.6% to 359 globally, respectively, and  sponsor-related volume by dollar value also significantly increased by 74.6% to $33.90 billion in the U.S. and by 129.7% to $85.24 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Crossborder activity also demonstrated strength in October, and increased significantly across most indicators. Crossborder deal volume by dollar value increased by 112.9% to $132.99 billion, whereas the number of crossborder deals decreased globally by 3.8% to 608. U.S. inbound activity as measured by dollar value increased by 49.6% to $33.90 billion, driven in part by the announced $16.23 billion proposed acquisition of Tiffany & Co by LVMH Moet Hennessy Louis Vuitton SE, while the number of U.S. inbound crossborder deals decreased in October by 14.1% to 97. U.S. outbound activity as measured by dollar value increased significantly by 246.0% to $17.02 billion, driven largely by the announced $8.88 billion acquisition of InterXion Holding NV by Digital Realty Trust Inc. The number of U.S. outbound crossborder deals also increased by 3.5% to 120. Figure 1 and Annex Figures 5A—7A.

France was the leading country for U.S. inbound activity in October by total dollar value ($16.23 billion), due again to the proposed offer for Tiffany & Co, while Canada was the leading country for U.S. inbound activity in October by number of deals (26). Canada was the leading country for U.S. inbound activity by deal value ($58.44 billion) and by number of deals over the last 12-month period (334 deals). The Netherlands was the leading country of destination for U.S. outbound activity in October by total dollar value ($8.88 billion) for the first time since June 2017, due to the $8.88 billion InterXion Holding NV acquisition. Canada was again the leading country of destination for U.S. outbound activity over the last 12 months as measured by dollar value ($29.73 billion), whereas the U.K. was the leading country of destination for U.S. outbound activity in October by number of deals (24) and over the last 12 months (264). Figure 3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in October and over the last 12 months by number of deals (285 and 3,100, respectively). Real Estate and Property was the most active target industry in October by dollar value, while Computer and Electronics was the most active target industry over the last twelve months ($19.45 billion and $412.42 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in October 2019, average target break fees were slightly above their 12-month levels (at 4.0% compared to 3.7%). Average reverse break fees were, however, significantly above their 12-month levels (at 8.1% compared to 5.8%). The percentage of deals containing a go-shop provision also increased to 25.0% in October 2019, compared to the 12-month figure of 12.2%. Figures 6, 7 and 8. Cash transactions comprised 58.3% of U.S. public mergers, above the 52.4% 12-month average. Figure 9. Hostile or unsolicited transactions comprised 7.7% of U.S. public mergers in October 2019, significantly lower than the 12-month average of 13.5% 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, November 2019,” available here.