Mixed fortunes for M&A in 2013

March 2014  |  FEATURE  |  MERGERS & ACQUISITIONS

Financier Worldwide Magazine

Global M&A deal volume was up 9 percent in 2013 compared to the previous year, according to data released by Dealogic, however deal activity actually decreased by 15 percent year on year. The overwhelming majority of that deal volume was registered in the first three quarters of 2013, as Q4 saw deal volume decline by 14 percent compared with the same quarter in 2012.

Dealogic’s ‘Global M&A Review 2013’ notes that M&A deal volume last year climbed from $2.68 trillion in 2012 to reach $2.91 trillion. This figure was achieved through markedly fewer deals however – just 37,212 deals were announced in 2013, the lowest total since 2005.

The size of the average M&A deal also increased in 2013, reaching the highest global average since the $196m seen in 2007. Indeed, the average deal in 2013 was worth $162m, up from $129m in 2012.

Cross-border deal volume bucked the upward trend in 2013, however, falling 8 percent year-on-year to $800.6bn. Due to this decrease, cross-border M&A accounted for the lowest share of total M&A volume since 2009. In the fourth quarter, cross-border deal volume dropped 19 percent year on year with 2012, reaching $218.9bn. In the Americas, cross-border M&A declined 37 percent in 2012. The EMEA region was the only area globally which saw an increase, up 12 percent.

The Americas

US targeted M&A rose 20 percent on 2012’s total of $979.7bn, reaching $1.18 trillion last year. This significant rise in deal volume saw 2013 achieve the highest annual total since 2007. Yet, despite the increase in deal volume, deal activity actually declined 19 percent. 2013 saw just 9999 US targeted deals completed, down from 12,303 in 2012.

The healthcare sector led the way for US targeted M&A, generating deal volume of $195bn, the highest since 2006’s $201.9bn. The healthcare sector was also the most targeted sector for US inbound M&A, with $345.5bn worth of acquisitions announced. The telecoms industry, with $189.4bn, was the second most popular sector.

Mega deals – transactions valued at $10bn and above – helped to drive US M&A volume in 2013. There were 12 such deals, worth an aggregate $367.4bn, the highest volume of mega deals since 2008’s total of $401.8bn. Accordingly, mega deals accounted for 31 percent of total US M&A. Deals valued between $1bn and $10bn accounted for the majority of US targeted M&A, at 37 percent of all deals.

Outside of the US, Canadian targeted M&A volume fell 40 percent from $148bn in 2012 to $89.4bn in 2013, the lowest annual total since 2004. Latin American targeted M&A also dropped in 2013, falling to $111.2bn – the lowest annual total since 2009. Brazil was the most targeted Latin American nation with 697 deals worth $62.7bn. Mexico was the second most targeted with $18.7bn, down from 2012’s $34.9bn.

EMEA

Despite a 16 percent drop in deal activity in 2013, Europe targeted M&A volume increased 5 percent to $791.4bn last year. In spite of the decline in deal activity there was a 24 percent increase in deals valued over $5bn in the region. The telecoms sector was the most active, with 20 deals valued at $1bn-plus announced in 2013, for an aggregate value of $106.3bn – the highest level since 2005. The largest European deal of 2013 also came in the telecoms sector when Liberty Global announced its $21.5bn offer for Virgin Media in February.

Middle East targeted M&A volume climbed 37 percent, up from $24.3bn in 2012 to $33.3bn, the highest level since 2007. Africa targeted M&A also grew by 41 percent last year, reaching $56.3bn. Deal activity fell by 19 percent however – in 2013 only 678 deals were announced compared with 836 deals the previous year.

Asia Pacific

The Asia Pacific region, excluding Japan, saw a 17 percent increase in M&A volume reaching $546.5bn. However, deal activity fell 7 percent against 2012. China was the most targeted nation within the region with 3519 deals valued at $240.7bn. In total there were 81 deals valued over $1bn in 2013, representing a 27 percent increase year on year. Real estate was the most targeted sector, with deal volume increasing by 84 percent to $98.2bn.

Japanese targeted M&A was valued at $96.7bn, the lowest total in a decade. Real estate and finance were the leading sectors with $36.6bn and $13.2bn worth of deals announced respectively. Japanese domestic volume reached $81.9bn, the lowest level since 2003. Cross-border inbound M&A volume did increase, however, to $14.8bn – the highest level since 2008.

© Financier Worldwide

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Richard Summerfield