2015 Global Merger & Acquisition Roundup With League Tables Of Advisors by Merger Market
Global Merger & Acquisition
2015 was a record year for global merger & acquisition with several regional records being broken, such as US and Asia posting their highest values, and some of the largest deal announcements. The total value of merger & acquisition reached a record level in late-November 2015, after the announcement of the world’s third largest merger & acquisition transaction in history. Pfizer’s US$ 183.7bn purchase of Allergan boosted total merger & acquisition values to US$ 4.28tn in 2015, 16.6% higher than the previous 2007 peak and 29.9% above 2014.
Despite a rise in interest rates, the war on terror, Gr/Brexit and upcoming US elections, the steam for dealmakers billowed particularly hard during Q2-Q4. For a third quarter in a row, Q4 2015 hit a value above US$ 1tn with transactions amounting to US$1.38tn, the highest valued quarter on record. The surge of activity during the last three quarters was the first of its kind, with both 2006 and 2007 only posting one quarter above US$ 1tn.
With cash to spend, bank’s continued appetite to lend, high board confidence and shareholders pushing for more merger & acquisition, deal values above US$ 50bn were abundant. There have only ever been six transactions above US$ 100bn, two of which were announced in 2015 (Pfizer/Allergan, Ab InBev/SABMiller). There were a total of 10 transactions above US$ 50bn that amounted to US$ 814.6bn, a lot higher than 2014’s US$ 245.9bn. As a result, these >US$ 50bn announcements contribute a record share toward global merger & acquisition at 19.0%, up from 10.4% during the peak for in 2007.
Last year saw some high profile transformational deals across a variety of sectors. Seven industries have reached an all-time record value in 2015, driven by global as well as sector specific influences. The sectors were Pharma, Medical & Biotech (US$ 574.6bn), Consumer (US$ 516.5bn), Technology (US$ 422.5bn), Business Services (US$ 238.3bn), Real Estate (US$ 221.8bn), Transport (US$ 127.4bn) and Defence (US$15.7bn). Divestments and cost saving strategies in the Energy, Mining & Utilities sector led to it taking the highest market share by value at 14.9%.
Europe Merger & Acquisition
Europe experienced a strong Q4 (1,360 deals worth US$ 468.2bn), representing the second highest quarterly deal value on record following Q2 2007 (1,746 deals, US$ 583.1bn). As a result, 2015 activity (US$ 1.10tn) reached its highest since 2007 (US$ 1.52tn), and was up 22.4% by value compared to 2014. Flagship deals – such as US-based Allergan’s US$ 183.7bn acquisition of Ireland-based Pfizer and Anheuser-Busch InBev’s US$ 120.3bn acquisition of UK-based SAB Miller – dominated deal activity in Q4.
It was a record-breaking year for inbound activity targeting the region, with 1,230 deals worth US$ 512.2bn announced overtaking all annual deal values on record. There were three mega-deals (>US$10bn) with a combined total of US$ 217.2bn announced during 2015, up 126.7% by value compared to the four deals worth US$ 95.8bn recorded in 2014, and the highest annual value for this deal size bracket on record.
Stringent US tax laws as well as a weakened Euro drove US companies to invest in Europe, seen through the high profile Pfizer/Allergan tax inversion deal accounting for 52.5% of the US’s investment into Europe in 2015. As a result, deal value from US companies targeting Europe reached US$ 350.0bn, up 61.2% by value compared to 2014 (US$ 217.1bn).
The UK has attracted the lion’s share of investment within the region (1,370 deals, US$ 425.3bn), accounting for a 38.7% share in European dealmaking, up from 17.5% in the previous year, and its highest share on record. Q4 deal value peaked at US$ 169.8bn, the UK’s highest quarterly deal value on record, bolstered by Anheuser-Busch InBev’s US$ 120.3bn acquisition of SAB Miller.
The devaluation of the Euro against the Dollar may have been one factor that held back European companies from investing abroad. Europe’s outbound activity (897 deals, US$ 269.0bn) is still 27.6% behind Europe’s total 2014 deal value (998 deals, US$ 371.7bn).
Africa & Middle East Merger & Acquisition
Total deal value targeting the Middle East and Africa (428 deals, US$ 47.3bn) has ended the year 20.9% behind 2014, despite the US$ 11.4bn acquisition of South Africa-based Medic-Clinic by UAE-based Al Noor announced in Q4, which provided a much needed boost to activity. Without taking this deal into account, US$ 35.9bn-worth of deals would mark lowest annual deal value since 2009 (US$32.9bn, 301 deals), reflecting a lacklustre year for merger & acquisition targeting the region.
Slow economic growth, a decreased demand for exports and unfavourable exchange rate movements are pushing South African companies to favour overseas acquisitions in place of domestic. South Africa has been the most active acquirer outside of the region to-date (excl. Israel), with 24 deals worth US$ 8.8bn representing an 118.8% increase by value compared to 2014 (25 deals US$4.0bn). As a result, annual deal value overtook all outbound deal values on record.
Egyptian companies are becoming attractive to investors due to low valuations in a pressured economic situation and fall of the Egyptian pound against the US dollar, according to Mergermarket intelligence. Egypt has experienced a strong increase in activity year-on-year, with 21 deals worth US$ 1.9bn representing a 153.5% increase by value compared to 2014 (14 deals, US$ 766m).
Despite the fall in deal value targeting the Middle East, 2016 is poised for a pick up in activity, according to Mergermarket sources. Total deal value to-date decreased 11.7% by value annually to US$ 20.2bn, down from 186 deals worth US$ 22.9bn recorded during 2014. Low oil prices and a growing population, combined with increasingly westernised consumer habits, are putting pressure on the demand for goods and services in the food and healthcare sectors, particularly within growing markets such as the UAE.
US Merger & Acquisition
The US drove global merger & acquisition during 2015, with 4,786 deals worth US$ 1.97tn to-date accounting for 46.2% of global activity, the highest share since 2001, putting both Europe (25.7%) and Asia-Pac (excl. Japan) (21.7%) in the shade. Q4 experienced a typical slow-down, with 1,075 deals worth US$ 528.2bn down 14.9% compared to Q3’s record high (1,255 deals, US$ 620.7bn). Nevertheless, deal value ended the year up 40.6% compared to 2014, reaching a new peak previously seen in 2006 (4,657 deals, US$ 1.42tn).
Pharma, Medical & Biotech was the most hotly targeted sector in 2015 with 530 deals worth US$ 296.9bn, representing a 28.7% increase by value compared to 2014’s deal value, with healthcare consolidation a key topic, such as Anthem’s US$ 50.4bn acquisition of Cigna, and Aetna’s US$ 26.6bn purchase of Humana. The US Tech sector also had a confident year attracting 777 deals worth US$249.1bn, a 91.9% increase compared to 2014, overtaking all annual deal values on record.
Strong economic growth coupled with low interest rates resulted in a perfect storm for acquisition finance, with plenty of cheap debt available to fund deals. During 2015 the value of cash & equity transactions increased to US$ 699.8bn, up 43.5% compared to 2014’s annual total (US$ 487.7bn), reflecting a balance between cheap loans and cash piles on balance sheets.
Outbound deal value boomed with 1,301 deals worth US$ 424.4bn announced during 2015, the highest on record and up 38.2% compared to 2014 (1,384 deals, US$ 307.1bn). Of these outbound deals, US$ 196.8bn (46.4%) were targeting the Pharma, Medical & Biotech sector, with the well-documented US$ 183.7bn acquisition of Ireland-based Allergan by Pfizer bumping up total deal value.
Attractive tax laws have resulted in Ireland and the UK becoming the most targeted countries by US companies in 2015. Ireland (36 deals, US$ 190.7bn) received the bulk of investment from the Allergan/Pfizer deal, whilst the UK (244 deals, US$ 61.8bn) benefited from the US$ 18.2bn acquisition of Visa Europe by US-based Visa Inc.
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