Global And Regional Mergers & Acquisitions Roundup For Q1-Q3 2016 Has Goldman Sachs In The Lead

Global And Regional Mergers & Acquisitions Roundup: Q1-Q3 2016 – Including League Tables Of Financial Advisors by Merger Market

Mergermarket has released its Global M&A roundup for Q1 through Q3 of 2016, including its league tables for financial advisors.

A few key findings include:

• Global mergers & acquisitions dealmaking in 2016 has not been able to achieve the dizzying heights reached in 2015, with political uncertainty, increased regulation and decreased confidence on boards all weighing down on activity. To-date in 2016, 12,283 deals worth US$ 2.2tn represents a 20.2% value decrease compared to the same period in 2015 (US$ 2.8tn, 13,263 deals). Although M&A activity is down compared to the two preceding years, deal value has experienced two quarterly value increases this year, with Q3 (US$ 812.9bn) increasing 8.8% compared to Q2 (US$ 747.2bn)
• US M&A activity continued to be relatively resilient throughout the third quarter, in spite of government action on matters such as antitrust and uncertainty over the upcoming presidential election, along with the added expectation of an interest rate hike by year’s end. The US recorded its fifth-highest value on record (since 2001) for the Q1-Q3 period, following peak highs seen in the 2006/2007 pre-crisis and 2014/2015 recovery periods. Total value rose 17.4% in Q3 to US$ 384.8bn over Q2 (US$ 327.9bn), although the overall Q1- Q3 period fell 29.6% to US$ 962.4bn when compared to the record-breaking US$ 1.4tn value achieved in YTD 2015
• Of the top five global transactions in the year-to-date, the US was home to three, including the highest valued deal of the year – Germany-based Bayer’s US$ 65.3bn bid for US-based Monsanto. As a result, the US captured 43.8% of global market share, more than any other region. This was 46.2% more than Europe, which took the second-highest share (24.1%), and double that of Asia-Pacific (excluding Japan). Market uncertainty in Europe stemming from Brexit. along with a downturn in Asia following a blistering start to the year, resulted in the US taking the lion’s share of global deal activity

Regional Mergers & Acquisitions comparison

Global Mergers & Acquisitions

• Global M&A dealmaking in 2016 has not been able to achieve the dizzying heights reached in 2015, with political uncertainty, increased regulation and decreased confidence on boards all weighing down on activity. To-date in 2016, 12,283 deals worth US$ 2.2tn represents a 20.2% value decrease compared to the same period in 2015 (US$ 2.8tn, 13,263 deals). Although M&A activity is down compared to the two preceding years, deal value has experienced two quarterly value increases this year, with Q3 (US$ 812.9bn) increasing 8.8% compared to Q2 (US$ 747.2bn).
• Industrials & Chemicals has been the most targeted sector globally, with 2,313 deals worth US$ 416.8bn representing a 41.1% value increase compared to the same period in 2015 (US$ 295.4bn), and the highest YTD value since 2007 (US$ 411.8bn). A record seven mega-deals worth US$ 183.6bn pushed sector value to reach a post-crisis high. According to Mergermarket intelligence, a string of mega-mergers in the sector are set to create a myriad of M&A opportunities for private equity buyers and sellers.
• Acquisitive Chinese buyers remain a key driver of M&A globally, with 201 deals worth US$ 141.2bn so far this year targeting firms outside of the Asia-Pacific region overtaking all annual deal values and volumes on Mergermarket record (since 2001). Chinese dealmakers are the dominant force behind Asia-Pacific’s outbound activity (434 deals, US$ 162.9bn), accounting for a record 84.7% of deal value, and 46.3% of deal count. The most targeted sectors by Chinese dealmakers were Industrials & Chemicals (64 deals, US$ 68.5bn) and Technology (29 deals, US$ 24.0bn), which recorded year-on-year value increases of 498.4% and 297.2%, respectively.
• Despite concerns surrounding Brexit, the immediate drop in sterling following the referendum vote caused opportunistic dealmakers to engage in a bargain hunt for UK assets. This was seen in Japan-based Softbank’s US$ 30.2bn acquisition of UK-based Tech firm ARM holdings – the highest valued deal targeting a UK company this year – announced in July. As a result of a few big-ticket deals, Q3 inbound activity into the UK (US$ 49.3bn, 121 deals) jumped 283.0% by value compared to Q2 (US$ 12.9bn, 159 deals).

[drizzle]

European Mergers & Acquisitions

• European M&A is facing challenges due a wave of macro-economic uncertainty sweeping across the continent, with Brexit, the upcoming Italian referendum, French and German national elections all affecting dealmakers’ confidence. The climate of instability seemed to put a dampener on M&A during Q3 (1,323 deals, US$ 154.1bn), with value dropping 19.7% compared to Q2 (1,851 deals, US$ 191.9bn), and deal count dropping to its lowest since Q3 2012 (1,274). As a result, year-to-date M&A value (4,810 deals, US$ 529.4bn) stands 11.6% behind the same period in 2015 (5,004 deals, US$ 599.1bn), with deal count decreasing only 3.9% (194 deals).
• The Technology sector has seen strong year-to-date activity, with 484 deals worth US$ 59.0bn increasing 16.8% by value compared to the previous record in 2015 (524 deals, US$ 50.6bn), and reaching its highest year-to-date value on Mergermarket record (since 2001). According to Mergermarket intelligence, M&A will be a route for tech companies to capture growth in a constrained economic environment, with fintech, mobile computing, healthcare IT and security technology noted as areas to watch.
• Fuelled by healthy balance sheets and a stable domestic economy, German dealmakers have been investing larger sums outside of their borders. Bolstered by the long-awaited US$ 65.3bn Bayer/Monsanto deal, the value of German outbound M&A excluding Europe (79 deals, US$ 89.5bn) has already overtaken 2015’s annual total (100 deals, US$ 9.5bn) by 2.5x, without taking into account this monumental deal. German bidders have also been active within Europe, with 157 deals worth US$ 49.3bn overtaking 2015’s annual total (US$ 17.5bn) by 181.3%.
• The immediate drop in sterling following Brexit caused opportunistic dealmakers to engage in a bargain hunt for UK assets. Japanbased Softbank’s US$ 30.2bn acquisition of UK-based Tech firm ARM holdings – the highest valued deal targeting a UK company this year – was a clear example of this trend. Q3 inbound activity into the UK (US$ 49.3bn, 121 deals) consequently stands 283% ahead of Q2 2016 (US$ 12.9bn, 159 deals), as a result of a few high-profile deals, despite accounting for 38 fewer transactions.

U.S. Mergers & Acquisitions

• US M&A activity continued to be relatively resilient throughout the third quarter, in spite of government action on matters such as antitrust and uncertainty over the upcoming presidential election, along with the added expectation of an interest rate hike by year’s end. The US recorded its fifth-highest value on record (since 2001) for the Q1-Q3 period, following peak highs seen in the 2006/2007 pre-crisis and 2014/2015 recovery periods. Total value rose 17.4% in Q3 to US$ 384.8bn over Q2 (US$ 327.9bn), although the overall Q1-Q3 period fell 29.6% to US$ 962.4bn when compared to the record-breaking US$ 1.4tn value achieved in YTD 2015.
• Of the top five global transactions in the year-to-date, the US was home to three, including the highest valued deal of the year: Germany-based Bayer’s US$ 65.3bn bid for US-based Monsanto. As a result the US captured 43.8% of global market share, more than any other region. This was 46.2% more than Europe, which took the second-highest share (24.1%), and double that of Asia-Pacific (excluding Japan). Market uncertainty in Europe stemming from Brexit, along with a downturn in Asia following a blistering start to the year, resulted in the US taking the lion’s share of global deal activity.
• Inbound activity fell slightly by only 0.8% to US$ 359.2bn from US$ 361.6bn in YTD 2015. This was the second-highest Q1-Q3 value on record after 2015’s peak. Attractive valuations due to low commodities led Canada, on the hunt for bargains within the Energy, Mining & Utilities (EMU) sector, to become the top foreign bidder targeting US companies, investing a record US$ 103.6bn in the year-to-date, a 39.3% increase in value over YTD 2015 (US$ 74.4bn). Simultaneously, 67.3% of Canada’s inbound activity focused on the EMU sector.
• EMU was the top sector in the US in the year-to-date, reaching US$ 190.6bn in value – a 20.4% increase over the same period last year (US$ 158.3bn). However, the period’s most notable sector was Industrials & Chemicals, as a result of the aforementioned Bayer/Monsanto deal, which jumped to second place this year with US$ 173.5bn from fifth last year with US$ 133.8bn, a 29.7% rise in value.

Central & South American Mergers & Acquisitions

• Central & South America is exhibiting signs of a modest recovery after the sharp downturn that began in 2015 against a backdrop of falling commodity prices and deepening corruption scandals. In the year-to-date, the region recorded 363 deals worth US$ 49.7bn, an 8.7% uptick in value from YTD 2015’s 424 deals worth US$ 45.8bn. Similarly, Q3 2016 saw a 10.5% increase in value to 114 deals worth US$ 24.8bn from 157 deals worth US$ 22.4bn in Q3 2015.
• Brazil, the region’s largest economy, concluded its trial against former president Dilma Rousseff with her impeachment in August. Interim president Michel Temer will remain in office until the current presidential term expires in 2018. In the month following Rousseff’s trial, the country’s M&A activity posted its highest gains in value since 2013, increasing 166.7% to US$ 8.7bn across 19 deals over last September’s US$ 3.3bn across 17 deals. In Q3, value rose 10.0% to US$ 16.2bn over Q3 2015 (US$ 14.7bn).
• Mexican M&A rose again slowly after taking a plunge at the end of 2015, having been hard hit by falling oil prices and changes in US monetary policy. Value rose 165.5% in Q3 2016 (US$ 2.2bn) over Q3 2015 (US$ 844m), though YTD 2016 recorded only US$ 4.7bn overall, a 57.2% decline from YTD 2015 (US$ 11bn). Of Q3’s value, 38.0% was due to a domestic deal: Infraestructura Energetica Nova’s US$ 852m bid for the Ventika Wind Power Project, indicating a growing interest in alternative energy investments. However, with an economy closely tied to that of the US, uncertainty over the latter’s looming presidential election and a potential further increase in interest rates could affect Mexico’s M&A for the rest of the year.
• Inbound M&A into the region has gained some ground, increasing 25.7% in value so far this year to US$ 26.7bn from US$ 21.2bn in YTD 2015. While incoming deals from the neighboring US fell 56.3% in value to US$ 4.3bn over YTD 2015 (US$ 9.9bn), bids from China rose 4.1x to a record US$ 3.8bn over YTD 2015 (US$ 932m). However, it was Canada that gave a surprise boost to the region’s inbound activity, up 16.7x to US$ 11.3bn – also a record – from US$ 677m in YTD 2015, 46.0% of which was due to the Brookfield Infrastructure Partners’ led US$ 5.2bn buyout of a 90% stake in Brazil-based midstream company Nova Transportadora do Sudeste.

See the full report below.

[/drizzle]