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Global M&A decelerated in October; private equity is a shining light

Donald Davis | Vice President, Advisor Sales | November 21, 2017

Global M&A continued to decelerate in October as global political uncertainty becomes the market norm. A total of 1,183 deals worth over $218 billion were announced globally during the month, reflecting a 52 percent drop in value year over year, with 317 fewer transactions.

The Construction sector was a shining star this month, with the highest deal values, despite executing fewer deals when compared to the same period in 2016. The 48 deals, valued at nearly $55 billion accounted for about 25 percent of total market share for October. This value spike was driven by a couple of mega deals, including the $38.9 billion acquisition of Spanish road- toll provider Abertis Infraestructuras SA by German construction company Hochtief AG.

Energy, Mining & Utilities also remains among the strongest sector performers, with 92 deals at over $37 billion, accounting for over 17 percent of market share for the month, despite falls in both value and volume on the same period in the previous year. There were two energy deals in the top 10 for the month, including the $5 billion buyout of Singapore’s renewable assets owner Equis Energy by a private equity-backed consortium led by Global Infrastructure Partners. 

While overall M&A figures are lagging, private equity (PE) performance offers a shining light. October continued to see strong performance, with total PE buyout for 2017 now exceeding the total for 2016. At 2,564 deals worth $427 billion, this year has so far produced nearly $17 billion more in value through 447 fewer deals. Contributing to this result is the Tencent and SoftBank investing over $1 billion in Ola Cabs for supply and technology developments – the largest PE deal of 2017 so far. The second-largest deal saw CDPQ invest $400 million in Logos India Ventures. To date, 2017 has seen four investments above $1 billion compared with just one last year.

North America took the lion’s share of deals this month, with 421 deals worth nearly $85 billion, while being down on both volume and value year-on-year. European M&A also took a dive year-on-year despite taking 36 percent of market share in October, with 428 deals valued at $79 bilion. Two of the top five deals for the month were executed by European companies – in Germany and Spain – including the purchase of a selection of Bayer AG’s crop science businesses by German chemical giant BASF SE for nearly $7 billion. This deal also helped to spur the Industrials & Chemicals sector to third place for October.

Despite a continuing decline in both volume and value, a healthy pipeline of deals could still see the fourth quarter bounce back. In late October, CVS Health entered talks to purchase health insurer Aetna in a deal estimated at $70 billion, while semiconductor firm Broadcom made an unsolicited bid for rival Qualcomm in early November, which at $130 billion, would see the largest technology acquisition in history round-out the year on a high.

Each month, Merrill presents The Monthly M&A Insider, which explores the global M&A market with respect to the numbers, movements and trends, as well as revealing the top financial and legal advisors – globally and across six regions (North America, Central and South America, Europe, Middle East and Africa, Asia-Pacific and Japan). To view the full report, download your copy today. 

 

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