Despite the sell-off in global markets due to concerns of China’s economy, M&A activity has not really been affected, according to Mergermarket-Merrill Datasite’s September 2015 M&A Insider report.
Global M&A saw 952 deals worth US$297.8bn and was up 12.7% by value in August 2015 when compared to the same period last year. Year-to-date 2015 has also been the highest valued first eight months to start a year since 2007 when there were 10,836 deals worth US$2.7tn through August and is the second highest valued eight months on Mergermarket record.
Global buyouts in August saw 102 deals worth US$46.9bn, which is up 89.1% compared to August 2014 (191 deals worth US$24.8bn). The surge in buyouts is attributable to eight deals valued collectively at US$40.5bn, accounting for 86.4% of total buyout value in August, most notably, the US$12.5bn buyout of Energy Future Holdings Corporation by a consortium led by Hunt Consolidated. Exits saw 120 deals worth US$28.7bn, down 42.6% compared to the same month the year prior (179 deals worth US$50bn).
The top sector in August, with a 25.7% market share, was Industrials & Chemicals with 203 deals worth US$76.6bn, which is up 291% in value compared to August 2014 but with 50 fewer deals, due to Berkshire Hathaway’s US$36.5bn acquisition of Precision Castparts Corp and CF Industries Holdings’ US$8.2bn acquisition of OCI NV’s European, North American and Global Distribution businesses.
North America was the dominant player in global M&A by value with 307 deals worth US$177.3bn, accounting for 59.5% of global M&A and was up 6.6% compared to August 2014 (476 deals worth US$166.3bn). And Asia (excl. Japan) was up 57.1% in August 2015 with 251 deals worth US$58.6bn compared to 291 deals worth US$37.3bn in August 2014, and was only behind North America in global market share despite not having any deals in the top ten. And despite the ongoing financial struggles in Europe, the region was only down 1.7% by value compared to August 2014 (411 deals worth US$52.2bn) with 312 deals worth US$51.3bn in August 2015.
Both cross-border and domestic M&A activity were up 1.2% and 13.1 respectively, in August 2015 with 359 cross border deals worth US$95.9bn and 600 domestic deals worth US$180bn, compared to August 2014.
The increased M&A activity at the end of summer indicates Q3 will end on a strong note and head into Q4 with headwind, leading to another strong quarter in M&A activity this year. Experts believe that concerns about Europe and China’s stalling economy will not deter M&A for the rest of the year and will even carry into 2016.
Charts source: ey.com/ccb.