M&A activity declined across most measures in December 2019. The number of deals fell by 17.3% in the U.S., to 613, and by 7.1% globally, to 2,665. Total deal value[1] decreased by 21.2% in the U.S., to $122.92 billion, but increased by 3.9% globally (driven primarily by sponsor-related activity), to $347.75 billion. Average deal value also decreased by 4.7% in the U.S., to $200.53 million, but increased by 11.9% globally (again driven primarily by sponsor-related activity), to $130.49 million. Figure 1. The good news, however, is that U.S. M&A activity was up overall for 2019, as we will report in our annual issue of M&A at a Glance.

Strategic vs. Sponsor Activity

The number of strategic deals decreased in the U.S. by 20.9% to 459 and globally by 7.3% to 2,313. Strategic deal volume as measured by dollar value decreased by 25.5% to $95.17 billion in the U.S. and decreased slightly by 0.8% to $271.43 billion globally. The number of sponsor-related deals decreased by 4.3% to 154 in the U.S. and by 5.9% to 352 globally. Sponsor-related volume by dollar value also decreased slightly by 1.6% to $27.76 billion in the U.S. but increased by 25.2% to $76.32 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Crossborder activity weakened in December. Crossborder deal volume by dollar value decreased by 12.6% to $85.32 billion, and the number of crossborder deals decreased globally by 10.2% to 623. U.S. inbound activity as measured by dollar value decreased by 37.7% to $23.92 billion, and the number of U.S. inbound crossborder deals decreased in December by 33.6% to 87. U.S. outbound activity as measured by dollar value decreased by 4.3% to $9.23 billion and the number of U.S. outbound crossborder deals also decreased by 14.7% to 99. Figure 1 and Annex Figures 5A—7A.

The U.K. was the leading country for U.S. inbound activity in December by total dollar value ($5.82 billion), and Canada was the leading country for U.S. inbound activity by total dollar value over the last 12-month period ($44.71 billion). Canada retained its lead for U.S. inbound activity by number of deals in December (19) and over the last 12-month period (328).

The U.K. was also the leading country of destination for U.S. outbound activity by total dollar value in December ($2.58 billion) and Canada was again the leading country of destination for U.S. outbound activity as measured by dollar value over the last 12 months ($27.76 billion). Canada was the leading country of destination for U.S. outbound activity by number of deals in December (17), and the U.K. was the leading country of destination for U.S. outbound activity by number of deals over the last 12 months (261). Figure 3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in December and over the last 12 months by number of deals (198 and 3,327, respectively). Chemicals was the most active target industry in December by dollar value ($27.15 billion), driven largely by DuPont de Nemours, Inc.’s divestment of its Nutrition & Biosciences, Inc. business to International Flavors & Fragrances Inc. for $26.2 billion. Computers and Electronics was the most active target industry by dollar value over the last 12 months ($454.77 billion). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in December 2019, average reverse break fees were below their 12-month levels (at 4.0% compared to 5.5%), and average target break fees remained consistent with historical levels (at 3.7 % compared to 3.6% for the 12-month average). The percentage of deals containing a go-shop provision was 12.5% in December 2019, which is the same as the 12-month figure. Figures 6, 7 and 8. Cash transactions comprised 50.0% of U.S. public mergers, below the 53.3% 12-month average. Figures 6, 7 and 8. Cash transactions comprised 71.4% of U.S. public mergers, above the 53.8% 12-month average. Figure 9. Hostile or unsolicited transactions comprised 5.6% of U.S. public mergers in December 2019, significantly lower than the 12-month average of 12.5% 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, January 2020,” available here.