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M&A at a Glance (March 2013)

March 15, 2013 download PDF

The long awaited mega deal made a spectacular return in February 2013, with statistics showing a sharp rise in average deal size and total volume globally and in the U.S.   These increases were accompanied by a marked decline in the number of deals, with the number of U.S. deals down by more than 50%.  See Figure 1.  The acquisitions of H.J. Heinz Company ($23.25 billion), Dell Inc. ($20.39 billion), Virgin Media Inc. ($12.85 billion) and US Airways Group, Inc. ($11.00 billion), all announced in February, were the four largest U.S. public mergers of the last twelve months.  See Figure 5.  Prior to February, the last leveraged buyout over $20 billion was announced in May 2007 (ALLTEL Corporation at $24.70 billion), and the last strategic deal over $20 billion was announced in July 2011 (Medco Health Solutions, Inc. at $28.53 billion).

Although average deal value increased, average break fees and reverse break fees as a percentage of equity value both decreased in February, once again evidencing what we have observed to be an inverse relationship between deal size and the size of break fees as a percentage of deal value.  See Figure 6.  Last month also broke the upward trend in cash only U.S. deals, declining to 50% of deals from 80% in January 2013 and 75% in December 2012.  See Figure 9.

Finally, we note that this issue of "M&A at a Glance" introduces a new Figure 3, detailing the Top 5 Countries of Origin or Destination for U.S. Crossborder Transactions.  Despite the attention given to BRICs in recent years, Brazil was the only country out of that category to break into the top five for crossborder M&A activity with the U.S. during the past twelve months and only as a country of destination for investment by U.S. companies. Canada and the U.K. were the only countries that appeared in the top five of both origin and destination for crossborder M&A activity in the past 12 months.  See Figure 3.

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