Mergermarket has released its Global M&A roundup for the first quarter of 2017 (Q1), including its league tables for financial advisors.

A few key findings include:

  • Global dealmaking so far has remained resilient in the face of an uncertain year, with 3,554 deals worth US$ 678.5bn announced in the first quarter representing an 8.9% increase in value compared to the same period last year (4,326 deals, US$ 622.9bn). Due to ongoing uncertainty regarding upcoming European elections, transactions will be viewed as more precious, with larger sums being invested in fewer deals. This is reflected in the average size of disclosed value deals (US$ 403.4m), which reached its highest Q1 level on Mergermarket record (since 2001) due to nine recorded mega-deals (>US$ 10bn), up from eight in Q1 2016
  • A stand out trend has been the number of Consumer mega-deals announced, with a record three deals valued over US$ 10bn resulting in the sector deal value (395 deals, US$ 136.1bn) reaching its highest valued Q1 since 2008 (497 deals, US$ 180.2bn). This rebound in activity follows on from a slow 2016, where just one mega-deal (Danone/Whitewave Foods) was announced for the whole year. Deals such as BAT/Reynolds (US$ 60.8bn), Luxottica Group/ Essilor International (US$ 25.4bn) and Mead Johnson/Reckitt Benckinser (US$ 17.8bn) caused Q1 value to already account for 61.6% of total 2016 Consumer activity (2,181 deals, US$ 220.9bn)
  • For the US, Energy, Mining & Utilities (EMU) was the quarter’s top sector, continuing to drive dealmaking and registering a 28.4% US market share. EMU also hit a record Q1 value of US$ 85.3bn with 86 deals, a 71.5% increase in value over Q1 2016 (US$ 49.8bn) despite a fall in deal count by nine. The Energy subsector (US$ 76.8bn) accounted for most of the rise with 90.1% of EMU market share, while Mining had 2.2% (US$ 1.9bn), and Utilities 7.7% (US$ 6.6bn)

Regional M&A comparison

Global & Regional M&A

Global

  • Global dealmaking so far has remained resilient in the face of an uncertain year, with 3,554 deals worth US$ 678.5bn announced in the first quarter representing an 8.9% increase in value compared to the same period last year (4,326 deals, US$ 622.9bn). Due to ongoing uncertainty regarding upcoming European elections, transactions will be viewed as more precious, with larger sums being invested in fewer deals. This is reflected in the average size of disclosed value deals (US$ 403.4m), which reached its highest Q1 level on Mergermarket record (since 2001) due to nine recorded mega-deals (>US$ 10bn), up from eight in Q1 2016.
  • A stand out trend has been the number of Consumer mega-deals announced, with a record three deals valued over US$ 10bn resulting in the sector deal value (395 deals, US$ 136.1bn) reaching its highest valued Q1 since 2008 (497 deals, US$ 180.2bn). This rebound in activity follows on from a slow 2016, where just one mega-deal (Danone/ Whitewave Foods) was announced for the whole year. Deals such as BAT/Reynolds (US$ 60.8bn), Luxottica Group/ Essilor International (US$ 25.4bn) and Mead Johnson/Reckitt Benckinser (US$ 17.8bn) caused Q1 value to already account for 61.6% of total 2016 Consumer activity (2,181 deals, US$ 220.9bn).
  • A reversal of fortunes was seen for Chinese dealmakers investing abroad, who after a record-breaking 2016 have had their ambitions thwarted by strict regulation imposed on transactions valued over US$ 2bn. Chinese dealmakers invested in 75 deals worth US$ 11.8bn outside their borders in the first quarter, dropping 85.6% in value compared to Q1 2016 (96 deals, US$ 82bn) and 72.1% compared to Q4 (87 deals, US$ 42.3bn) to reach its lowest quarterly value since Q3 2014 (US$ 9.0bn) and deal count since Q1 2015 (61).
  • Political uncertainty in Europe appears to have affected activity from international dealmakers pursuing deals in the region. Largely as a result in the previously mentioned drop in Chinese activity, Q1 inbound M&A (262 deals, US$ 71.7bn) dropped 39.0% by value compared to Q1 2016 (315 deals, US$ 117.5bn), marking the lowest Q1 since 2014 (US$ 55.8bn). Despite this, US dealmakers had a strong quarter investing into the continent, with 150 deals worth US$ 55.7bn up 16.0% by value compared to Q1 2016 (176 deals, US$ 48bn), posting its strongest Q1 deal value since 2008 (138 deals, US$ 112.6bn).

Global & Regional M&A

Global & Regional M&A

Europe

  • Europe has followed global M&A trends in 2017, posting high values and low deal count as dealmakers become more strategic and selective. The European M&A value has dipped 1.8% to US$ 170bn (1,346 deals) compared to Q116 (US$ 173.2bn) while the number of deals has hit its lowest level since 2013 (1,341 deals). Global share of M&A value has fallen to 25.1% from 27.8% in Q1 ’16. ‘Fewer but larger deals’ appears to be the mantra among dealmakers as the average size of disclosed value deals in Q1 rose to US$ 379m, up from US$ 325m during 2016 – reaching its highest point on Mergermarket record (since 2001), following three megadeals (>$10bn).
  • With political uncertainty rife throughout Europe, inbound investment appears to have taken a hit – reducing 55.7% by value in comparison to Q4 ’16. The first quarter has seen 262 deals worth US$ 71.7bn – the slowest by value since 2014 (US$ 55.8bn, 291 deals) amid the backdrop of the start of Brexit negotiations and upcoming elections in France and Germany. In comparison to Q1 ’16 the UK (US$ 13.1bn, 88 deals) and France (US$ 1.1bn, 13 deals) have seen large drops in investment from outside Europe, down 29.5% and 72.6% respectively, while German activity remains strong (US$ 9.1bn, 38 deals), growing 58.8% by value.
  • Private Equity buyouts have reached US$ 25.8bn (263 deals), up by 56.8% in comparison to Q1 ‘16 (US$ 16.5bn, 273 deals). Increased competition as a result of abundance of dry powder appears to be pushing buyout valuations up, with five deals valued at over US$ 1bn recorded. Private equity activity in Europe has seen a transatlantic surge, with US PE firms conducting six of the top ten investments so far in 2017, including Advent International’s hostile bid for STADA, worth US$ 5.1bn.
  • Industrials & Chemicals continues to lead the way by deal count, with 280 transactions announced in the sector so far this year. Stone Canyon Industries’ US$ 2.3bn acquisition of Mauser Group was the largest deal seen in the sector in Q1. As a result of the US$ 29.6bn acquisition of Actelion by Johnson & Johnson, the Pharma, Medical & Biotech sector has been the most targeted by value at US$ 38.5bn (95 deals), a 132.7% increase in comparison to the start seen in 2016.

Global & Regional M&A

Global & Regional M&A

US

  • As geopolitical uncertainty continues to wash over the globe, US M&A values remained strong through the first quarter, rising 19.4% to US$ 300.2bn with 1,116 deals over Q1 2016’s US$ 251.3bn with 1,256 deals. However, the Q1-to-Q1 drop in deal count of 140 was the largest since 2009 (-461). Political anxiety over an unpredictable White House saw dealmakers cut back
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