As we approach the end of 2019, it’s a great time to take a look back at trends in mergers and acquisitions activity that emerged around the world throughout the year. Overall, there was an increase in the number of reported M&A transactions and total deal value worldwide.
Four industries experienced significant increases in deal value from the first half of 2018:
- Industrial (22.6%)
- Energy and power (11.2%)
- Health care (6.1%)
- High tech (2.8%)
New M&A Motivation
A growing trend that is permeating all industries is the deal activity that is occurring as a result of companies needing to integrate technology into their offerings, altering the business landscape. Companies are being compelled to work with a much wider scope of partners to accomplish their tech-enabled goals. For this reason, we are seeing more non-traditional partnerships with different depths of cross-industry integration. These nontraditional deals include joint ventures and alliances, corporate venture capital investments, and the purchase of minority stakes. An example of these types of alliances in 2019 include Uber Advanced Technologies’ (their self-driving car unit) raising of $1 billion in funds from Toyota, Softbank’s Vision Fund and auto components manufacturer Denso.
During the first quarter of 2019, we saw relatively few cross-border megadeals. This could be because of fluctuating geopolitical factors such as increased trade tension between the United States and China. Amid this year’s early cross-border megadeals was the acquisition of Canadian company Goldcorp by Newmont Mining Corporation, a U.S. company. The deal was a stock-for-stock transaction valued at $10 billion.
In the middle market, M&A activity remained robust through the first quarter. Transaction volume was up slightly over the previous year’s period. Private equity funding and a high level of strategic buyer activity continued to drive deals significantly. Foreign buyer activity increased to account for almost 16% of middle-market deals.
Megadeals heated up in the second quarter of 2019, especially in North America. Of the 21 megadeals announced in the first half of 2019, the highest in value included:
- AbbVie’s $62 billion buyout of Allergan
- Fidelity National Information Services $35 billion purchase of Worldpay
- Saudi Aramco’s $69 billion majority-stake purchase of petrochemicals group Sabic
- Bristol-Myers Squibb’s $74 billion acquisition of rival Celgene
- The $121 billion merger of United Technologies and Raytheon
The second quarter also saw an increase in deal volume in the middle market, up from the same period in 2018. Foreign buyer activity accounted for almost 14% of middle-market deals.
By the third quarter, global M&A activity dropped 16% year-on-year to $729 billion, the lowest quarterly volume since 2016.
In Europe, M&A activity reached $249 billion, up more than 45% over the same third-quarter time period in 2018. With a 6.4% share of global M&A and $177 billion worth of transactions, Britain was Europe’s biggest M&A market in 2019. This is due in part to the uncertainty regarding Brexit turning companies into bargain acquisition targets. Additionally, Ireland showed strong M&A activity through the first half of 2019 with deal value up 24% compared with the previous year, while later slightly slowing amid economic uncertainty.
Third-quarter megadeals in the U.S. included:
- The $24.6 billion merger of drug giant Pfizer’s off-patent branded drugs business with Mylan NV
- Media companies CBS Corp. and Viacom Inc.’s $20 billion merger in an all-stock deal
In the middle market, global third-quarter deals closed totaled $600 billion, remaining on pace with the first three quarters of 2018. The largest of these deals included Norwegian company Equinor ASA’s $965 million acquisition of U.S.-based Caesar Tonga Oil Field.
High Tech M&A
The technology sector continued to be ripe for M&A transactions in 2019. However, we have witnessed a softening in tech M&A activity in the second half of the year. This could be due in part to enhanced scrutiny that tech companies are facing around issues of consumer privacy, regulations, and misuse of market power. Such scrutiny can be the source of some apprehension to invest in these types of businesses.
Among the notable mega tech deals of 2019 were:
- Apple’s $1 billion purchase of Intel’s modem business
- Google’s $2.6 billion acquisition of Looker
- Nvidia’s $7 billion acquisition of Mellanox
- Salesforce’s $15.7 billion acquisition of Tableau
- Uber’s $31 billion purchase of their rival Careem
In the first half of 2019, the largest North American middle-market technology deals (each valued at $500 million) included:
- JPMorgan’s acquisition of InstaMed
- Envestnet, Inc.’s acquisition of PIEtech, Inc.
- Kohlberg Kravis Roberts & Co. L.P. takeover of OneStream Software LLC
Globally, the largest middle-market technology deals included:
- Canada Pension Plan Investment Board and Insight Venture Partners LLC’s acquisition of Switzerland’s Veeam Software AG
- GEMS Education’s purchase of Ma’arif for Education & Training
- TPG Capital/Insight Venture Partners’ buyout of Kaseya Limited
Is a Deal in Your Future?
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