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M&A at a Glance (October 2014)
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October 15, 2014 download PDF
The M&A market cooled in September 2014 compared to prior months. Global volume declined slightly (6.8%) for a third consecutive month to $285.5 billion, while U.S. volume declined more substantially (19.9%) for a second month to $128.4 billion. A decrease in sponsor-related volume (34.6%) drove the global decline, while a decrease in strategic volume (30.1%) drove the U.S. decline. One area of relative strength was U.S. private equity, which increased by $10.48 billion compared to August 2014, a 47.1% increase.
While aggregate volume fell, the number of deals rose across the board. There were approximately 300 more global M&A transactions in September 2014 compared to August 2014 (a 10.7% increase), and approximately 100 more U.S. transactions in the same period (a 12.7% increase), leading to the greatest number of U.S. transactions in one month (921) in over a year-and-a-half. The average value of deals fell from a global perspective (to $207 million, a 5.8% decrease) and in the U.S. (to $462 million, a 31.1% decrease). Figure 1.
Meanwhile, the usual frontrunners tended to dominate the crossborder categories with Germany worthy of special mention. Germany ranked first in inbound deal volume with $46.60 billion in September 2014 and now ranks second over the last 12 months behind only Canada. The three largest U.S. transactions in September 2014 involved German companies: (i) Merck KGaA's agreement to purchase Sigma-Aldrich Corporation for $16.67 billion; (ii) SAP SE's announcement that its subsidiary, SAP America, Inc., has entered into an agreement to acquire Concur Technologies, Inc. for $7.36 billion; and (iii) Siemens Aktiengesellschaft's agreement to buy Dresser-Rand Group Inc. for $6.36 billion. With respect to Outbound U.S. Crossborder Transactions, Canada saw the most deals (30) and continued to outpace all other countries for the last 12 months, although Belgium ranked first in September 2014 by volume with $3.41 billion. Figures 3 and 5.
Looking solely at U.S. public mergers valued at $100 million or higher, the average target break fee remained consistent in September 2014 at 3.4% of equity value, the same percentage observed over the last 12 months. Average reverse break fees rose to 7.3% in September 2014, compared to 4.9% over the last 12 months. Interestingly, while reverse break fees for mergers involving financial buyers remained 6.7% (the exact same percentage level as for the last 12 months), reverse break fees for mergers involving strategic buyers increased to 7.4% from an average of 4.4% over the last 12 months. Figure 7. Approximately 13.6% of offers were hostile/unsolicited as compared to 18.2% over the last 12 months. Figure 12.