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M&A at a Glance (September 2014)

September 15, 2014 download PDF

August 2014 saw the summer's hot M&A activity stall somewhat.   While the dollar volume of global M&A deals remained over $300 billion for the fourth time in the last five months (at $311 billion), total and strategic deal volumes and number of deals for all sectors showed declines.  The increase in sponsor-related transactions was the only bright spot (increasing to $82.2 billion).  Overall there were 855 fewer global M&A transactions as compared to the previous month (down from 3,631 deals in July to 2,776 deals in August 2014).  The number of global strategic, sponsor-related and crossborder transactions each saw similar declines of approximately 25% as compared to the previous month.  U.S. M&A activity reflected similar trends.  The number and total deal volume of U.S. strategic and sponsor-related deals generally declined, with sponsor-related transactions being the only positive sector. 

Although global crossborder volume, number of deals and average deal value all showed declines as highlighted in Figure 1, the U.S. crossborder M&A market showed inconsistent trends between inbound and outbound transactions.  Inbound U.S. transactions declined by over 60% in volume (from $64 billion in July to $24 billion in August 2014), but outbound U.S. volume grew by approximately 200% (from $14 billion in July to $42 billion in August 2014).  The number of deals fell for both U.S. crossborder categories, but the trends in average value of inbound and outbound U.S. crossborder transactions aligned with the movement in total crossborder volume.  The average value for inbound transactions declined by 32% (from $1.1 billion in July to $738 million in August 2014), but the average value for outbound transactions also grew by almost 200% (from $248 million in July to $729 million in August 2014).  Figure 1.

By volume, Utility & Energy was the most active U.S. target industry by a large margin owing to the acquisition of Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC and El Paso Pipeline Partners, L.P. by Kinder Morgan, Inc., a transaction consolidating several Kinder Morgan entities under one corporate roof.  Figure 2.  Canada continued its lead for inbound U.S. crossborder transactions by volume over the last 12 months ($93.5 billion), by number of deals in August 2014 (25) and by number of deals over the last 12 months (398).  Canada also took the top spot for outbound U.S. crossborder transactions by number of deals both in August 2014 (29) and over the last 12 months (306).  Figures 3 and 4.

Average reverse break fees as a percentage of equity value continued their upward trend to 5.0% this month from the relative low of 3.2% in May 2014, but the average target break fee as a percentage of equity value remained steady at 3.6%.  Figure 6.  Tender offers took a breather in August, accounting for only 8.3% of U.S. public mergers as compared to 27.5% of such deals over the past 12 months.  Figure 11.  Nearly a quarter of U.S. public merger offers involved hostile or unsolicited approaches in August 2014.  Figure 12.

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